How Student Loan Repayment Changes After Graduate School

Susannah Snider

After Becky Boler graduated from Syracuse University with a master's degree in international relations in 2010, her student loans came due with a vengeance.

She had about $60,000 in combined debt, which she'd deferred during her time in the Peace Corps and graduate school, resulting in $500 per month student loan payments.

"Looking back, I would have gone to a cheaper school," says Boler. "At the time you just don't know how much it is since it's deferred."

In fact, Boler's debt load is average for a graduate student. The typical graduate school borrower from the class of 2012 took on $57,600 in combined undergraduate and graduate debt, according to a report from the New America Foundation.

And as the six-month grace period winds down for federal student loans, graduate borrowers may realize that repaying the often-higher and more complex loans after a graduate degree program is a different beast than repaying after undergrad.

[Learn about graduate student loans differ from college debt.]

Here's what to know about repaying student loans as a graduate student.

-- More debt means different repayment options. Graduate students borrow more, on average, than undergraduates.

The difference is partially because undergraduates run into borrowing limits on federal students loans -- they can borrow no more than $31,000 in subsidized and unsubsidized student loan debt -- while graduate students can borrow up to the full cost of attendance in Graduate PLUS loans.

While the standard 10-year repayment plan may have been enough for their smaller undergraduate loans, "other repayment plans are more flexible," says Ben Kohl, president of the Kansas Association of Student Financial Aid Administrators.

Borrowers with high debt should look to alternative repayment plans -- including several income-based repayment plans , which require a high debt-to-income ratio to qualify -- and can result in loan forgiveness after a set number of on-time payments.

[Understand four income-driven student loan repayment plans.]

-- The terms of the loans are different. Those who borrowed as both undergraduate and graduate students likely have a range of loans, with different interest rates and other rules dictating how they're repaid.

For example, graduate students can't currently borrow subsidized loans, which have interest covered by the government while the borrower is in school. And the rates they pay to take out unsubsidized loans are higher, at 6.21 percent for graduates and 4.66 percent for undergraduates.

Graduate PLUS loans, which are unavailable to undergraduates, carry a 7.21 percent rate.

Student can head to the National Student Loan Data System to learn what they've borrowed and how much they owe, says Katharine Ruby, senior manager of college finance with College Coach, which advises students on the college admissions and finance process. Private debt borrowers should pull their credit reports to see their borrowing history, she says.

-- The six-month grace period isn't guaranteed. Graduate PLUS loans, which can make up a chunk of a graduate student's debt, don't include a grace period. Instead borrowers are eligible for a post -enrollment deferment option, which works much like a grace period, delaying repayment by six months, says Ruby.

And things get more complicated with resuming repayment of undergraduate debt.

Borrowers who never took advantage of the six-month grace period on their undergraduate federal student loans -- perhaps who headed straight to graduate school before it ended -- will find that they can use the grace period to delay repaying their undergraduate loans after graduate school.

Those who already used that grace period after college are out of luck. There is no second grace period on those undergraduate loans. Instead they'll need to resume repayment immediately after graduate school unless they apply for forbearance, says Ruby.

-- Undergraduate debt may have swelled. Some college debt may blossom while a borrower defers repayment in graduate school.

For example, someone repaying a $20,000 unsubsidized loan, which doesn't have interest covered during graduate school, at a 6.8 percent interest rate, would see the balance swell by nearly $1,400 during a one-year master's degree program, according to an online calculator.

[Explore graduate student loan options for 2014.]

Subsidized loans, which graduates may have borrowed during college, will continue to see interest covered during the in-school deferment, says Ruby. But be aware that there are some subsidized loans -- those taken out between July 1, 2012 and July 1, 2014 -- which will gain interest during the six-month grace period.

And graduates may lose track of how much these varied interest rates may add to their loan balances. "The challenge for graduate students who went straight to graduate from undergraduate, I think, is sticker shock," says Angela Hovatter, director of financial aid at Frostburg State University in Maryland.

Trying to fund your education? Get tips and more in the U.S. News Paying for Graduate School center.

Susannah Snider is an education reporter at U.S. News, covering paying for college and graduate school. You can follow her on Twitter or email her at