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For postgraduate students, the costs of tuition, books, study-related travel, and living expenses can add up quickly. Consequently, many students pursuing an advanced degree must take out postgraduate loans. There are two primary types of postgraduate loans, those which are federally funded and those which are privately funded. Beyond these basic categories, the exact nature of postgraduate loans can vary widely depending upon such factors as the country in which the lender is located and the financial standing of the borrower.
The two main types of postgraduate loans are federally-funded loans and privately-funded loans. As its name suggests, a federally-funded loan is provided by a governmental source. Depending on which country the lender is located in, loan funds may be provided by a national, regional, or local governmental source. In the US, for instance, federal loans are financed by the US Department of Education, while in Canada they are provided by individual provinces.
Obtaining a federally-funded postgraduate loan usually involves filling out an application form and providing details about one’s financial status. If the loan application is approved, the funds may be dispersed in one lump sum or in installments. Some federal loan providers cover loan interest until a borrower completes his course of study, while others do not. In some cases, interest is paid only for current students with acute financial need. Generally, a borrower must begin repaying his federal loan plus accumulated interest when he completes his course of study, although some federal lenders offer a short “grace period” which allows the borrower to get his finances in order before beginning repayment.
Privately-funded postgraduate loans are financed by a private institution, such as a bank. In countries where both federal and private loans are available, such as the US, interest rates on private loans tend to be higher than those for federal loans. Under these circumstances, private loans are often regarded as a last resort, and are taken only when a student has borrowed the maximum amount allowable by federal lenders.
Some countries, such as Ireland and Croatia, do not offer federal postgraduate loans. In such countries, postgraduate students who find themselves unable to afford their tuition and living expenses may have no alternative but to borrow from a bank. Some banks may offer specialized student loans, however, which have a lower rate of interest than other loan products.
Proper procedure for obtaining a privately-funded postgraduate loan can vary depending on the lending institution. In some cases, the process may be almost identical to that of getting a federal loan, while in other cases, the borrower may need to visit a loan specialist at a bank. Unlike many federal loan providers, private lenders generally do not pay interest on a loan while the borrower is in school. Further, many private lenders do not offer a “grace period” before repayment begins.