How to take out a PhD loan

Pursuing a PhD can be a long and expensive process. It’s important to know your funding options, including PhD student loans.

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If you’re considering a PhD, these are the PhD student loans and other funding options available for your doctorate program.  (Shutterstock)

Getting a PhD can be an expensive undertaking.

The average annual tuition and fees for graduate students was $19,749 for the 2020-21 school year, according to the National Center for Education Statistics. Considering it takes PhD candidates an average of 5.8 years to complete their doctoral degree, according to the National Center for Science and Engineering, that could mean a price tag of nearly $115,000 for your doctorate degree.

Even though these costs may sound overwhelming, doctoral students have a number of options for paying for their degree, including PhD loans.

Private student loans may be an option to cover your PhD education. Credible lets you compare private student loan rates from multiple lenders, all in one place.

Take out federal PhD loans first

If you need to borrow money to pursue your PhD, the best initial loan source is the U.S. Department of Education. That’s because federal PhD loans (like all federal student loans) offer fixed interest rates no matter your credit history, flexible repayment terms, no payments until after you leave school, and options for postponing payments.

Two types of federal loans are available to PhD students: Direct Unsubsidized Loans and Grad PLUS Loans.

Federal Direct Unsubsidized Loans 

Graduate students, including PhD students, can take out federal Direct Unsubsidized Loans to pay for their program. As unsubsidized loans, your interest will accrue and capitalize (be added to your principal) while you’re in school — unless you make voluntary interest payments. 

For the 2022-23 school year, you can expect the following:

  • Annual borrowing limit: $20,500
  • Aggregate borrowing limit: $138,500 (this includes all federal loans received for undergraduate study)
  • Interest rate: 6.54%
  • Disbursement fee (subtracted from the amount borrowed): 1.057%

Don’t forget that the U.S. Department of Education adjusts the interest rate annually on July 1, so the interest rate on federal loans during your first year of doctoral education may not be the same rate for future years.

Federal Direct Unsubsidized Loans have a standard repayment period of 10 years with a fixed monthly payment. But you do have the option of switching to alternative repayment plans


Federal Grad PLUS Loans

These types of loans are specifically designed for graduate students, including PhD students. Like Direct Unsubsidized Loans, the interest on Grad PLUS Loans is unsubsidized, so it will accrue and capitalize while you’re studying, unless you make voluntary interest payments.

The 2022-23 limits and rates for federal Grad PLUS Loans are:

  • Annual borrowing limit: Cost of attendance, minus any other assistance you receive
  • Aggregate borrowing limit: None
  • Interest rate: 7.54%
  • Disbursement fee (subtracted from the amount borrowed): 4.228%

Consider private student loans to fill the gaps

For-profit banks and other lenders offer private student loans. This means the specific borrowing limits, interest rates, repayment terms, fees, and credit requirements will vary from lender to lender. The best way to find the right private student loan for you is to shop around and compare rates and terms from at least three to five lenders. 

You may be wondering why PhD students would take out private student loans since federal Grad PLUS Loans have a borrowing limit as high as the school’s cost of attendance. Here are a few reasons you might consider turning to private PhD student loans:

  • Lower interest rates — Federal PhD loans currently have relatively high fixed interest rates, at 6.54% for Direct Unsubsidized Loans and 7.54% for Grad PLUS Loans. PhD students with good to excellent credit may be able to borrow money from a private lender at lower rates than those offered by the federal government.
  • Lower fees — Federal Direct Unsubsidized Loans have a 1.057% disbursement fee, and the Grad PLUS Loan disbursement fee is an eye-watering 4.228%. While most private lenders also charge an origination fee (which works the same as the federal disbursement fee), borrowers with good credit will likely be able to find a loan with a lower origination fee.

Private student loans can also be a good way to reduce the cost of your PhD loans down the road. 

If you need to take out private student loans, visit Credible to compare private student loan rates from various lenders in minutes.


How to pay for a PhD without taking out loans

If you’d like to avoid taking out loans for your PhD program, you can find several other ways to pay for your advanced degree, including:

  • Scholarships and grants — Your university or a program within your field may offer scholarships or grants for your studies. This is financial aid that doesn’t have to be repaid.
  • Fellowships — These merit-based financial prizes are awarded for short-term opportunities and can help you pay for specific aspects of your program.
  • Graduate, teaching, or research assistantships — This type of program requires you to work part-time in your field at your university in exchange for a full or partial tuition waiver. Some assistantships also come with a living stipend so you can focus wholly on your studies.
  • Tuition reimbursement — Your employer may offer tuition reimbursement for your PhD program, especially if your field of study is related to your current job.

Do PhD loans cover living expenses?

You can use both federal Direct Unsubsidized Loans and Grad PLUS Loans to pay for living expenses. The U.S. Department of Education will usually disburse the student loan funds directly to your school. If there’s any money left over after the cost of tuition and fees is covered, the remaining amount will be refunded to you, and you can use that money to pay for housing or any other education-related costs. 

With private PhD loans, you can borrow whatever amount you can qualify for and use the money for any education-related expenses, including housing or living expenses.

How much can you borrow with PhD student loans?

The amount you can borrow with a PhD student loan depends on the source of your loan. 

  • Federal Direct Unsubsidized Loans have an annual borrowing limit of $20,500 and an aggregate limit of $138,500, which includes all federal student loans you received for your undergraduate education.
  • Federal Grad PLUS Loans allow you to borrow up to the total cost of attendance of your school, minus any other assistance you receive. There’s no aggregate limit.
  • Private PhD student loans have different borrowing limits depending on the private lender you borrow from, your credit history, and other factors.

With Credible, you can compare private student loan rates without affecting your credit.