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College Students and Recent Grads

Guide to Graduate Student Loans & Grants in 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Graduate school funding is a bit trickier than undergrad funding. Your options for loans and grants become more limited. And while work-study opportunities may be attainable and provide great experience, they often eat up a lot of time and offer low compensation.You do have options, though — whether you’re a grad student or a parent. This guide will take you through them all in detail.

Part I: Financing Options for Grad School

As far as federal options, there are two types of graduate student loans: Direct Unsubsidized Loans and Direct PLUS Loans. Each financing option looks different, and you may need a combination of both loans to fully fund your education.

Federal graduate student loan options and programs

Loan TypeHow much can I borrow?What are current rates?Origination FeeRepayment OptionsWhere can I apply?
Direct Unsubsidized LoansUp to $20,500. Medical students may be able to borrow more if they ask their school.6.60%1.066% if you take your first disbursement prior to Oct. 1, 2018.
1.062% if you take your first disbursement between Oct. 1, 2018 and Oct. 1, 2019.
Standard, Graduated, Extended, IBR, PAYE, REPAYE, ICR, PSLFIf you are eligible, Direct Loans are typically included in your financial aid package after you fill out the FAFSA.
Direct PLUS LoansCost of attendance after any other financial assitance has been applied.7.60%4.264% if you take your first disbursement prior to Oct. 1, 2018.
4.248% if you take your first disbursement between Oct. 1, 2018 and Oct. 1, 2019.
Standard, Graduated, Extended, IBR*, PAYE*, REPAYE*, ICR*, PSLF*

*Does not apply to Direct PLUS Loans issued to parents.
After you have filled out the FAFSA, you can apply here

Eligibility requirements

In order to qualify for any federal student aid, you need to meet certain requirements. Specifically, you must…

  • Have a high school diploma, home-school high school education, GED or other certification of equivalency.
  • Be a U.S. citizen or permanent resident.
  • Have a Social Security number. This requirement is waived if you are from the Marshall Islands, Palau or Micronesia.
  • Register with the Selective Service, if you’re a male age 18-25. If you do not do so during this time frame, it can impact your ability to access federal financial aid later in life.
  • Be enrolled or accepted into a school with the aim of obtaining a degree, certificate or other recognized educational credential.
  • Maintain good grades. Standards for this requirement vary from school to school.
  • Certify that you aren’t currently in default on any federal student loans, that you owe money back on a grant, and that you will only use the money for educational endeavors. This certification happens on the FAFSA application.

If you meet all of these requirements, you now have to look at specific qualifications for each type of student loan.

Direct Unsubsidized Loans

In order to qualify for a Direct Unsubsidized Loan, you must be attending a participating educational institution and be enrolled at least half-time in a program that will lead to a degree or certificate. There is no need to demonstrate financial need in order to qualify for a Direct Unsubsidized Loan.

Direct PLUS Loans

Direct PLUS Loans have very specific credit standards. Qualification requirements include:

  • Must be pursuing a degree or certificate at the graduate or professional level and be attending school at least half-time — or be the parent of a student who is doing so.
  • Cannot have a debt that is currently 90 days delinquent with a balance of over $2,085.
  • Cannot have an item worth over $2,085 sent to collections or written off in the two years prior to your application.
  • Cannot have any of the following appear on your credit report in the past five years: default determination, bankruptcy, foreclosure, tax lien, repossession, wage garnishment or a write-off of other student loan debt.

These standards apply to both student and parent borrowers. If you cannot meet them, you can still borrow money by finding a cosigner who does meet these standards.

You may also be able to qualify if you can prove the blip on your credit report was caused by extenuating circumstances. In order to do this, you’ll need to complete credit counseling to the satisfaction of the PLUS program.

Pros and cons of federal grad school loans

There are times when taking out federal loans will be advantageous to you as a grad student and times when other options may make more sense. Let’s drill down into the pros and cons.

Pros:

  • Federal graduate student loans give you access to a number of repayment options, including some that adjust your monthly payments based on your current income.
  • Some debt forgiveness programs, such as Public Service Loan Forgiveness, only apply to federal loans
  • Credit requirements are typically more lenient than they are in the private sector.

Cons:

  • The fact that there are origination fees on Direct Unsubsidized Loans and Direct PLUS Loans is a major negative, as it will cost you money to borrow the money in the first place.
  • Interest rates on Direct PLUS Loans could be bested by private loan rates if you have a good credit history. You may be able to save money by going to a private lender in specific circumstances.
  • Direct Unsubsidized Loans and Direct PLUS Loans require at least half-time enrollment. If you are pursuing a graduate-level degree while working a day job, this may present a problem, depending on how many credits you are able to take on.

Federal grants and programs for grad school

While loans are money you will have to pay back, grants and work-study programs are sources of funding that you won’t need to repay. It’s essentially free money, and at the graduate level, you have a few federal options.

TEACH Grants

The Teacher Education Assistance for College and Higher Education (TEACH) Grant is a program that pays for part of your education as long as you promise to use your degree in a high-need, low-income area for four of the eight years following the completion of your education. You can also teach at a Bureau of Indian Education school during this time period to qualify.

High-need fields include:

  • Bilingual education
  • English language acquisition
  • Foreign languages
  • Math
  • Science
  • Special education
  • Reading specialists
  • Regional needs, which are updated annually

If your grant were disbursed today (or anytime between Oct. 1, 2018, and Oct. 1, 2019), the maximum amount you could qualify for would be $3,752.

If your school participates in the TEACH program, it will have specified which programs qualify for the grant. Get in touch with your financial aid office to find out if your program is eligible.

While you’re there, make sure you are eligible by checking your school’s academic requirements for qualification.

If you do not teach in a high-need field in a low-income or Bureau of Indian Education school for four of the first eight years after your graduation, your grant will turn into a Direct Unsubsidized Loan, which will have to be repaid.

After you have confirmed with your school that you are enrolled in an eligible program, you will need to fill out the FAFSA. You will also need to sign a letter of agreement and complete program-specific counseling.

Pell Grants

It is extremely rare for a grad student to qualify for a Pell Grant. In fact, for eligibility purposes, you’re not allowed to be pursuing a graduate degree.

The only time Pell Grants are available after undergrad work is when you are pursuing a post-baccalaureate teaching certificate. Even then, your certificate program must meet the following requirements:

  • It does not lead to a degree.
  • It is a prerequisite in your state in order to work as a primary or secondary school teacher.
  • It comes from a school that does not offer a bachelor’s degree in education.
  • It must be a post-baccalaureate program.

And as a student, you must also be enrolled at least half-time, pursuing your initial teacher certification/licensure within your state.

For the 2018-2019 school year, the maximum award you can receive is $6,095. The amount you get will be based on financial need.

To apply for a Pell Grant, all you have to do is fill out the FAFSA.

If a financial need is demonstrated when you fill out the FAFSA, you may be offered a work-study position. If your school participates, you’ll be given an hourly or salaried job where you are paid at least monthly. Your financial need will determine the number of hours you receive.

The kind of job you are assigned will depend largely on your school. You may find yourself in one of these fields:

  • Community service
  • Positions at your school
  • Fields relevant to your course of study

If you end up with a position on campus, you’ll likely be working for the school. If you are working off-campus, you’re more likely to be assigned to a position serving the public good or working in a position relevant to your future career.

You’ll make at least minimum wage, though as a grad student you may have some desirable skills that could land you a position with a pay boost.

Your school is obligated to issue you a paycheck at least once per month. The money will be paid directly to you unless you set up direct deposit payments, or you are applying your earnings toward tuition, fees or room and board.

Grants are a form of financial aid that you don’t have to pay back under most circumstances. However, if you don’t hold up your end of the educational bargain, you may have to return money that was paid to your school, or money you received as a refund check from your school.

You could end up owing money back for your federal grant if:

  • You don’t meet TEACH program guidelines as outlined above.
  • You drop out of school partway through the semester.
  • You reduce the amount of credits you are taking after the grant has been issued.

If you are disappointed by your FAFSA options, you should know that there are other ways to find funding for your graduate-level education. Be sure to review these resources prior to taking out loans.

Federal grants at the graduate level are admittedly thin. If you’re looking for other ways to pay for school that don’t involve student loans, here are some additional federal agencies outside the Department of Education that may be able to help.

ROTC scholarships

ROTC scholarships will pay for your education. You’ll also get a stipend for the time you spend at drill on weekends and may have your books covered as well.

In exchange for all of this money, you will be obligated to serve either on active duty or in the reserves after you have completed your education. Because you have a college education, you will enter the military as an officer.

Post-9/11 GI Bill

If you served in the military for at least 90 days after Sept. 10, 2001, and remain on active duty, or were honorably discharged due to disability after serving 30 consecutive days after the same date, the Post-9/11 GI Bill may cover your tuition and fees.

If a smaller portion of your service happened after Sept. 10, 2001, you may be eligible for prorated benefits.

All in-state tuition and fees will be paid at public schools, and up to $23,671.94 will be paid at private schools. This number changes annually.

If you still have a gap between how much the school charges and how much the Department of Veterans Affairs (VA) will pay under the latest version of the GI Bill, check to see if your school has opted into the Yellow Ribbon Program. Schools that do so reduce the tuition of veterans to meet the maximum VA payout, leaving you with no additional money to pay.

Yellow Ribbon schools may also provide funding equivalent to a Basic Allowance for Housing in addition to a stipend for books.

In certain cases, benefits may be transferable to minors, so if you are a parent who has unused GI Bill benefits, you may be able to give them to your child as they enter grad school.

AmeriCorps

AmeriCorps is a volunteer opportunity with some perks for college students. When you volunteer, you earn money for school through the Segal AmeriCorps Education Award. The amount of money you earn depends on how time-intensive your service is.

For example, currently, if you volunteer in an approved position for more than 1,700 hours over 12 months, you would qualify for an education credit worth $6,095 for the 2018-19 school year. You can only earn up to two full-time education credits. You can find further examples of how much you can earn on the Segal Award Eligibility page.

As a member of AmeriCorps, you may find yourself in one of the following positions or something similar:

  • Relief efforts after a natural disaster
  • Tutoring K-12 students
  • Building affordable housing
  • Working with local nonprofits and community groups

If you have served as an AmeriCorps member after Oct. 1, 2009, and are age 55 or older, you may have accrued educational benefits that you can pass on to your child, stepchild or grandchild. You can learn more program specifics here.

Other sources of federal grants for grad school

Higher education agencies in your state

Another great place to look for funding is the agency that handles higher education in your state. These state-level organizations typically offer grants. You’ll likely be prompted to visit your state’s website at the end of your FAFSA application, but if you want to learn more about available programs now, you can find yours here.

Your school’s financial aid office

Your school likely has endowments and partner employers — both of which might offer scholarship and grant opportunities. To find out what’s available at your school, schedule an appointment with the financial aid office.

Industry and professional organizations

Many industry and professional organizations offer some type of scholarship program for those studying in the field. Applying for these scholarships won’t just help you pay for school if you’re awarded — if you win one, it will look phenomenal on your resume.

Some of these organizations will require membership prior to application. While membership fees can be expensive, many such groups provide student-level memberships at a steep discount.

Private graduate student loans: A last resort?

Private graduate student loans are issued directly by lending institutions without the backing of the U.S. Department of Education. You can look to banks, credit unions or online marketplace lenders to access these loans.

Pros:

  • If you have a good credit history, you may be able to obtain a loan with lower rates than those currently offered through federal programs.
  • You may be able to access more capital than you would with federal loans, depending on your credit history and the type of federal loan.
  • You can shop around for different options. Some lenders don’t charge origination fees, and some are willing to work with you in cases of hardship.

Cons:

  • You will not have access to advantaged repayment programs like PAYE, REPAYE, IBR, ICR and PSLF (which are all covered in sections below).
  • If you do not have a good credit score, interest rates may be higher than federal loans, or you might not be able to get a private loan at all, depending on your credit report.
  • You have to shop around for different options. Some lenders will not work with you in cases of hardship, and factors like variable versus fixed interest rates may throw you for a loop if you’re not careful.

Questions to ask before you borrow private loans for grad school

Before you take out any graduate student loans, you’ll want to get answers to these questions:

This may vary, depending on your income and credit history.

This will typically be a range. If you have good credit, you may qualify for the best rates. If you don’t, you’ll be looking at the higher end of the spectrum.

Variable interest rates currently tend to start out lower. They may even stay lower for a set amount of time, but eventually they will move in accordance with the market. You may get lucky and have rates go down, but rates have been on the increase in recent years and are expected to continue to rise in the near term.

Fixed rates start out higher than variable rates but stay unchanged throughout the course of your loan term.

Shorter loan terms sometimes mean higher monthly payments, but you’ll usually end up paying less in the long term because of the way interest accrues over time.

If you can’t afford the monthly payments, though, you could end up paying late fees or damaging your credit. Longer loan terms may mean paying more interest by the time you’re through, but they also have the potential to lower your monthly payments.

Some lenders provide payment plans that allow you to defer payments until after graduation. Other payment plans start your payments immediately. Still others require interest-only payments while you’re in school, with principal payments being added after graduation.

Common fees to take note of are:

  • Application fees
  • Origination fees
  • Late fees
  • Prepayment penalty fees

Eligibility requirements to inquire about include credit requirements, citizenship/naturalization requirements and income requirements.

You’ll want to know if your lender offers any type of deferment in times of financial hardship. Some lenders will even work with you to help you find a new job or temporarily reduce monthly payments while you are in specific employment conundrums.

Compare private sector graduate school loan options here. >

Private LoansFederal Loans
Not eligible for advantaged repayment options (REPAYE, PAYE, ICR, IBR, etc.)Eligibile for advantaged repayment options
May or may not have origination fees Have origination fees
Potentially stricter credit requiremntsPotentially looser credit requirements : (depending on which private lender you're coparing them to) No credit requirements if we leave out PLUS loans
Interest rates potentially lower for those with good credit — can be much higher for those with bad creditInterest rates likely higher for those with good credit (with the possible exception of Perkins Loans)
Often offer an option of variable or fixed ratesOnly fixed rates for the products we are discussing
May require half-time enrollmentDefinitely require half-time enrollment
Will probably need a co-signer if you're a young borrower — especially wihtout a jobTypically won't need a co-signer

Part II: Repaying Grad School Debt

There is a slew of different repayment options, depending on which type of loan you take out. Whether you start repayment during your studies or after, here are some things you can do to prepare:

Federal grad school debt

Students are not required to make payments until six months after their graduation — or nine months if you have a loan from the now-expired Perkins Loan program. But just because you don’t have to make payments during this time period doesn’t mean you shouldn’t.

When to start repaying your federal grad school loan debt

The types of federal loans available to you as a graduate student accrue interest while you’re in school and during your grace period/deferment. You are not required to pay that interest immediately, but the unpaid interest will be added to your principal balance.

By making interest-only payments while you’re in school, you prevent the interest costs from multiplying upon themselves, saving you money.

You can pay toward the principal while you are in school as well, if you so choose, as there is no prepayment penalty on federal student loans.

Parents who have PLUS loans are typically required to start repaying immediately after the loan is disbursed. You can, however, request a deferment for the period during which your child is in school. It would be wise to at least make interest-only payments during this period if you choose to go this route.

Federal loan forgiveness and repayment assistance programs

Federal loans give you access to many advantaged repayment and forgiveness programs. Keep in mind that while many of these repayment plans are designed to make your monthly payment lower, they have the potential to cost you more over the course of your loan — especially if they don’t end in forgiveness — as interest will be charged over a longer period.

Income-Based Repayment (IBR)

If you took out your first student loan prior to July 1, 2014, and your student loan payments are more than 15% of your discretionary income, this program allows you to pay a maximum of 15% of your discretionary income for 25 years. After that point, your remaining debt is forgiven.

If you took out your first student loan after July 1, 2014, the capped percentage is 10%, and you will only have to pay it for 20 years.

Learn more about IBR here.

Income-Contingent Repayment (ICR)

If you opt into the ICR plan, you would make payments for 25 years. After 25 years, your remaining debt would be forgiven.

Your monthly payments would be the lesser of these two options:

  • 20% of your discretionary income
  • What you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income

Learn more about ICR here.

Pay As You Earn (PAYE)

Take your income and subtract 150% of the poverty level in your state. If your monthly student loan debt payments are more than 10% of the difference, you may qualify for PAYE. Use this calculator to see if you qualify.

Your monthly payments will be limited to 10% of your income and will never exceed what you would pay on a 10-year Standard Plan. After 20 years, the remainder of your debt will be forgiven.

You only qualify for this plan if your first student loan was disbursed after Oct. 1, 2007, and you have received at least one disbursement since Oct. 1, 2011.

Learn more about PAYE here.

Revised Pay As You Earn (REPAYE)

REPAYE does not have the same timing restrictions of PAYE. In fact, the date you took out your loans is irrelevant. There are also no income restrictions.

However, while you will only have to pay 10% of your discretionary income, there is no protection stating that your payments will not exceed those of a 10-year Standard Plan. You could end up paying more with this program — especially with a higher income.

Remaining balances on graduate school loans will be forgiven after 25 years.

Learn more about REPAYE here.

Public Service Loan Forgiveness (PSLF)

The future of this program is uncertain, but it is currently still open.

Under PSLF, you make payments for 10 years while you’re working 30-plus hours per week and considered a full-time employee by your employer. This job must be in a position of service (see list below), and the remainder of your loan balance will be forgiven. Your 10 years of payments should be made under IBR, ICR, PAYE or REPAYE.

Qualifying public service jobs include positions at:

  • Governmental organizations
  • 501(c)(3) organizations
  • Non-501(c)(3) organizations providing one of these services:
    • Public or school library services
    • Emergency management
    • Service on behalf of the U.S. military
    • Public education
    • Early childhood education
    • Law enforcement
    • Public interest legal services
    • Public services for the disabled or elderly
    • Public health

Learn more about PSLF here.

State programs

States have regional needs in a number of different fields, including medicine, education, social work, veterinary sciences, law and more. Across the country, there are programs offering to pay off portions of your debt if you agree to live and work in high-need communities.

Repaying private grad school debt

Different lenders will require different repayment terms from their borrowers. Be sure to understand what is expected of you before signing on the dotted line. Ask questions like:

  • Will I be required to make payments while I am in school?
  • If so, are they interest-only payments?
  • Will there be a grace period after graduation?
  • Do you have any deferment options in case of economic hardship?
  • What is the maximum time allowed for deferment?

When you should start repaying private grad school debt

The sooner you can pay off debt, the better. If your loan requires you to make principal and interest payments, make them without delinquency.

If your lender gives you the option of making interest-only payments while you’re in school and/or in a grace period, it’s a smart financial move to to save you significant interest.

Before you make any payments prior to your due date, make sure there is no prepayment penalty. Otherwise, a good portion of the money you think you’re throwing at your debt could end up going toward fees instead.

Learn more: Refinancing grad school debt

If you can get a lower interest rate on your student loans by refinancing, you may be able to save money as long as you pay off your debt in the same amount of time.

In order to avoid ruining your credit score, you may also want to refinance if you can’t afford your monthly payments. Find out more about potential advantages to refinancing here.

Type of LoanFederal Private
Pros
  • May be able to secure a lower Interest rate
  • Lowering monthly payments may help keep you from defaulting on your loans — but be sure to check all available repayment and deferment programs before refinancing in the private sector
  • May be able to secure a lower interest rate
  • Lowering monthly patments may help keep you from defaulting on your loans
Cons
  • You lose all potential access to advantage repayment programs and forgiveness
  • May have to pay application or origination fees
  • If you refinance for lower payments over a longer term, you will likely pay more in interest over the course of your loan
  • May have to pay application or origination fees
  • If you refinance for lower payments over a longer term, you will likely pay more in interest over the course of your loan
The rates and fees mentioned in this article are accurate as of the date of publishing.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Andrew Pentis
Andrew Pentis |

Andrew Pentis is a writer at MagnifyMoney. You can email Andrew here

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College Students and Recent Grads

College Ave Private Student Loans Review: Accessible Eligibility Criteria, Flexible Repayment

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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If you’re concerned about eligibility for a private student loan, consider that College Ave Student Loans stands out for its accessibility.

You could be an international student without a GED seeking an associate degree on a part-time basis, for example, and still qualify for College Ave private student loans.

Founded by former Sallie Mae executives in 2014, the online-only company offers competitive interest rates to students in college as well as career or graduate schools, as well as their creditworthy parents.

To ensure it’s the right lender for you, consider our review.

College Ave Student Loans review: The basics

While you could qualify for College Ave private student loans with several different educational backgrounds and ambitions, you still need to be creditworthy. Having a credit score of at least 660 is a good start.

The lender doesn’t disclose its specific credit criteria, but you could gauge your (or your cosigner’s) eligibility using the lender’s pre-qualification tool. Passing that test would unlock these loan features:

  • Loans for part- or full-time undergraduates, graduate students, career school students and parents
  • Prequalify with a three-minute application (and without affecting your credit)
  • No fees to apply
  • Fixed and variable interest rates

  • Borrow between $1,000 and your school’s full cost of attendance
  • Choose from four in-school repayment options, including full deferment
  • Select one of four repayment term options: five, eight, 10 or 15 years
  • Receive your loan in as little as 10 days after applying
  • Cosigners are accepted — and encouraged (note that they are required for international students who have a Social Security number)
  • Release your cosigner after more than half your repayment term has elapsed
  • Enjoy a federal loan-like six-month grace period after leaving school
  • Net a 0.25% interest rate reduction for enrolling in autopay
  • No penalty for paying off your loan early
  • Forbearance — the ability to temporarily suspend payments — is awarded on a case-by-case basis
  • Student loan forgiveness in the case of the borrower’s permanent disability or death

While the majority of the loan characteristics above are true no matter your status in school, there are some notable differences for graduate students, career school students and parents.

Graduate students

Whether you’re seeking a postgraduate, master’s, doctoral or professional degree, you can count College Ave private student loans as an option. Note that the ceiling on College Ave’s interest rate ranges as of early June 2019 was significantly lower for graduate students compared to undergrads.

In summer 2019, College Ave also added unique perks for postgraduate students seeking an MBA or other professional degree. The loans include longer grace periods, for example, with 12 months for dental students and 36 months for medical students.

There are also deferments available for students who enter a residency program — or, in the case of law school students, a clerkship — after receiving their degree. Additionally, students seeking these advanced credentials might be able to select a longer loan term (20 years) than their peers.

Career school students

If you’re pursuing an associate, bachelor’s or graduate degree in a career-focused program, including at some community colleges, keep this bonus in mind: College Ave offers borrowers of this loan type a $150 statement credit for completing their program.

Parents

College Ave gives parents even more repayment term flexibility. The lender said on its website that it would assist creditworthy parents in choosing one of 11 possible repayment terms, spanning between five and 15 years.

Another plus of borrowing from College Ave: The lender allows Mom or Dad to directly receive up to $2,500 of the loan funds to cover smaller, secondary expenses including books and supplies. (The balance would be sent directly to the student’s school.)

On the downside, however, the floor on College Ave’s interest rate ranges as of early June 2019 was noticeably higher for parents than for undergraduate students. Plus, parent borrowers only have three in-school repayment choices, not including full deferment. Making interest-only payments is the cheapest option available.

What we like about College Ave Student Loans

It’s rare to find a lender that’s so accessible. In College Ave’s eyes, you don’t need a high school diploma or GED, don’t need to be pursuing a four-year degree, don’t need to be enrolled full time — you don’t even need to be an American student (as long as you have a Social Security number).

Aside from flexibility on qualifying, below are a few more features of College Ave private student loans that benefit from additional context.

A bevy of in-school repayment options

Many private lenders offer fewer repayment options than College Ave. But College Ave provides four payment methods, including:

  • Deferred: Postpone payments until six months after leaving school, allowing interest to pile up on your balance.
  • Flat: Submit monthly dues of $25 to eat into the accruing interest on your loan.
  • Interest-only: Pay only enough each month to cover accruing interest to ensure you face the same balance you borrowed upon leaving school.
  • Full: Enter repayment immediately by making interest-and-principal payments, so you’ll owe less than what you borrowed once you step off campus.

For cash-strapped students, making (significant) in-school payments isn’t always possible. For other students with income or parental support, entering repayment sooner could pave the way for a faster route out of debt. That’s why it’s so nice to have options.

According to the lender, about 6 in 10 College Ave borrowers elect to submit in-school payments to whittle down interest before the reality of repayment hits upon graduation.

Pick your repayment term

Some lenders, including Sallie Mae, assign you a loan repayment term based on your creditworthiness.

One benefit of borrowing College Ave private student loans, however, is that you (and your cosigner) could independently choose your term. You might select five, eight, 10 or 15 years, depending on your budget and future income. (Unlike with federal loans, however, private lenders like College Ave don’t allow you to change terms later, extending or shortening your repayment term as you wish.)
College Ave said on its website that 84% of borrowers choose a term of 10 years or less.

Receive strong customer service

Nearly 400 College Ave borrowers had awarded a 4.8-out-of-5 rating of their lender — at least according to the lender website.

For a more objective accounting, Trustpilot lists a four-star rating for College Ave, and the Better Business Bureau gives the lender an “A+” grade.

What to keep in mind about College Ave Student Loans

If you like what you’ve learned about College Ave private student loans, keep in mind that no lender is perfect for every borrower.

Decide for yourself whether the following facts should point you in the direction of a competitor.

A long trek to cosigner release

By College Ave’s math, 96% of undergraduates have a cosigner on their loan. After all, teens and 20-somethings can make up for their thin credit files by piggybacking on a creditworthy cosigner, usually Mom or Dad.

The majority of top-rated lenders allow you to release that cosigner (from their legal obligation to repay your debt, if you can’t) after 12 to 48 months of successful payment history.

With College Ave private student loans, however, it’s a long haul. To remove your cosigner from your loan agreement, you must:

  • Reach the halfway mark of your loan term
  • Make 24 consecutive on-time payments
  • Show twice as much income as your loan balance
  • Pass a credit check

If you want to reward your cosigner by sending them on their way, you might avoid a 15-year loan term. Under that scenario, you wouldn’t be able to release them until you’ve been in repayment for seven-and-a-half years.

To make matters worse for some borrowers, international students can’t achieve cosigner release at all.

If cosigner release essential to you and your guarantor, you might consider borrowing from Sallie Mae, which offers a 12-month route to release.

A limited form of forbearance

Forbearance is a vital component of any student loan, as it allows you to press pause on your repayment in the face of hardships such as unemployment.

Unfortunately, College Ave is cagey about its forbearance policy, leaving details off its otherwise resource-heavy website.

It turns out, the lender evaluates forbearance applications on a case-by-case basis. In other words, if you find yourself out of work or under another sort of financial duress during repayment, there’s no guarantee College Ave will grant you a reprieve.

If you think you might need a more clear-cut safeguard built into your loan, you might opt to borrow from Discover, as the bank offers a variety of protections, from payment extensions to as many as 12 months of forbearance.

Third-party loan servicing

If you’re attracted to College Ave, in part, because of its modern, easy-to-use platform and strong customer service record, you might be disappointed to learn that the company outsources the servicing of its loans.

Repayment of College Ave private student loans even takes place on a different website. University Accounting Service (UAS) handles statements and payments and fields customer concerns.

When deciding whether College Ave is right for you, factor UAS into the equation, too. You might be wise to contact the latter company to get a sneak peek of its effectiveness in answering your loan management questions.

If you’re left wanting more, you might be better off walking into your local bank or credit union, where your loan will be funded and managed under the same roof.

Are College Ave Student Loans right for you?

If you’re an atypical college student — maybe you’re attending part time or seeking an associate degree — College Ave private student loans are more accessible than education financing found elsewhere.

Even if you’re attending a traditional four-year school, you could be drawn to the online lender’s assortment of in-school and postgraduate repayment options. They give you the power to customize a loan that works best for your borrowing situation. Plus, if you (or your cosigner) are especially creditworthy, you could unlock some of the lowest interest rates offered by banks, credit unions and online competitors.

College Ave won’t be as appealing, however, if you’re counting on a fast pathway to cosigner release or federal loan-like safeguards such as mandatory forbearance. To pit College Ave against the competition, find out where the lender ranked among our top-rated student loan companies.

MagnifyMoney has independently collected the above information related to this review, which is current as of June 3, 2019, unless otherwise noted. College Ave. neither provided or reviewed the information shared in this article.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Andrew Pentis
Andrew Pentis |

Andrew Pentis is a writer at MagnifyMoney. You can email Andrew here

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Building Credit, College Students and Recent Grads, Credit Cards, Earning Cashback

How You Can Have a Good FICO Score Just One Year After Opening a Credit Card

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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When I moved to the U.S. from my hometown of Hangzhou, in China, to pursue my undergraduate degree, the thought of establishing a credit history wasn’t even on my radar. I was, after all, an international student from China, where day-to-day credit card use had only recently caught on.

It wasn’t until I returned to the U.S. a few years later to pursue my master’s degree in Chicago that I realized I’d need to establish credit if I planned to launch my career in the States.

Just one year after I opened the card, I already had a solid FICO score – 720, to be exact. This score landed me safely in the “good” credit range, meaning I probably would not have trouble getting approved for new credit. I still had work to do if I wanted to get into the “very good” credit category, which starts at 740. But as a credit card newbie, I was not disappointed in my progress. 

Here’s how I did it.

I selected the right card for my needs

I wish I could say I diligently researched credit cards to choose the best offer and best terms, but honestly, I just got lucky.

Shortly before graduate school started, I visited friends in Iowa. When we were about to split the bill after dinner at a Japanese restaurant, I noticed that all my friends had a Discover card with a shimmering pink or blue cover. The Discover it® Student Cash Back was known for its high approval rate for student applicants, and had been popular among international students.

I thought, “Oh, maybe I should get this one, too.”

One of the friends sent me a referral link that very night. I applied and got approved quickly. We both received a $50 cash-back bonus after I made my first purchase — an iPhone — using the card through Discover’s special rewards program. I even received 5% cash back from the purchase.

Besides imposing no annual fee, the card had other perks, such as rewarding me with a $20 statement credit when I reported a good GPA (up to five consecutive years), letting me earn 5% cash back on purchases in rotating categories and matching the cashback bonus I earned over the first 12 months with my account. For me, it was a great starter card, but there are plenty of other options out there.

Check out our guide on the best credit cards for students.

I also could have explored other options of establishing credit, like opening a secured card, for example, which would have been a smart option if I hadn’t been able to qualify for the Discover it student card.

I never missed a payment

Despite my very limited financial literacy at the time, I attribute my strong credit score to the old, deeply ingrained Chinese mentality about saving and not owing.

I never missed payments, and I always paid off my balance in full each month, instead of just making the minimum payment. I didn’t want to pay a penny of interest.

Credit cards carry high interest rates across the board, but student credit cards generally have some of the highest APRs. This is because lenders see students like me — consumers without much credit history — to be risky borrowers, and they charge a higher interest rate to offset that risk.

Best Student Credit Cards June 2019

It wasn’t until much later that I learned payment history is critical to good credit. In fact, it is the biggest factor there is, accounting for 35% of my FICO score.

A Guide to Getting Your Free Credit Score

I was careful not to use too much of my available credit

My friends with more experience advised me to use as little of my available credit as possible. They warned me that overuse had hurt their credit scores in the past. This didn’t much sense to me, but I followed their advice, for the most part diligently.

I later learned this is almost as important as paying bills on time each month. Your utilization rate is another major factor in your FICO score. Credit experts urge cardholders to keep their credit utilization ratio below 30%. The lower, the better.

That means if you have three credit cards with a total available limit of $10,000, you should try to never carry a total balance exceeding $3,000, and you really should aim for much lower than that.

A Guide to Build and Maintain Healthy Credit

I beefed up my score with on-time rent payments

Keeping in mind the importance of not maxing out my credit card, I never considered paying my rent with the card. In fact, some landlords charge credit card fees for tenants who try to pay with plastic.

But I did find a way to establish credit by paying rent using my checking account.

I paid rent to my Chicago landlord through RentPayment, an online service. RentPayment gave me the option of having my payments reported to TransUnion, one of the three major credit-reporting agencies (the other two are Experian and Equifax). Because I knew I’d always pay bills on time, I signed up for the program.

This likely helped me improve my credit mix, another key factor influencing a credit score. The more types of accounts you show on your report, the better your score can be — if you make all your payments on time.

Yes, I made mistakes. This was my biggest one

My first foray into the world of credit wasn’t completely blip-free.

The only thing that hurt my credit, besides my short credit history, was that I had tried signing up for a Chase credit card, along with other ways to finance my iPhone, just a few days before I applied for my Discover card.

None of the other banks approved my applications, and my score went down at the very beginning, due to the number of “hard inquiries” against my credit report. Hard inquiries occur when lenders check your credit report before they make decisions regarding your application. Having too many inquiries in a short period of time can result in a ding to your credit score.

I’ve learned my lesson, though, and I’ll be cautious in the future when it comes to applying for a lot of credit in a short time period. Overall, it should be noted that you should not be afraid to apply for new credit — even when hard inquiries do hurt your score in the short term, it typically isn’t disastrous, and your score should recover fairly quickly as long as you are a responsible user of credit. Having more available credit can also help your utilization rate — as long as you don’t increase your charges, of course.

You can also check to see if you have prequalifed for any credit cards without triggering a hard inquiry.

If you’re new to the world of credit cards, consider taking the steps I outlined above, and you, too, may have a healthy credit score before you know it.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Shen Lu
Shen Lu |

Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at [email protected]

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