Juno's Graduate Student Loan Guide

What is an Interest Rate?

An interest rate is best understood as the cost of borrowing a certain amount of money. When you take out a student loan or any loan, it will come with this cost. People normally look to get loans that have the lowest interest rates (keeping in mind any associated fees that add to the total cost).

Some loans don’t begin charging interest until a certain time after you graduate, some start charging interest immediately. Interest is expressed as a percentage of the total loan amount. If you took out a $5,000 loan, and your interest was 10% fixed a year, that would mean that every year, $500 would be added to your original loan of $5,000 (assuming you only paid off the interest each year).

While seemingly insignificant, the difference between a 10% and 5% fixed interest rate in the example above could mean more than $250 in savings each year.

Fixed-Rate:

As the example above shows, a fixed rate will stay the same throughout the entire life of your loan

Variable Rate:

A variable rate is when an interest rate fluctuates through the repayment process. These interest rates rise and fall with something called SOFR, which “influential interest rate that banks use to price U.S. dollar-denominated derivatives and loans."

A quick note: Federal loans only offer fixed rates while private lenders usually offer both. Variable rates for private loans are usually lower than fixed rates, but they can go up and down over time.

Fees?

Applying for loans can come with fees. Here are a few common ones you may run into.

Origination Fee:

A fee charged by a lender when you first take out a loan. The federal government charges a 1.057% origination fee on Direct Unsubsidized loans and 4.228% on PLUS loans, and Grad PLUS is no longer available to new borrowers after July 1, 2026. Juno's partners have no origination fee. That might mean the difference between several thousand dollars depending on the amount you borrow.

Prepayment Penalty:

A fee if you pay back your loan ahead of the predetermined schedule. When you graduate, you become a lower credit risk and may be able to refinance your loans at a lower cost. Make sure your loan has no prepayment penalty, so you can refinance with ease. Very few lenders use this. Avoid it whenever possible.

Application Fee:

These are pretty rare. Federal loan applications don’t have application fees, and most private lenders don’t either. If you come across a private lender with an application fee, it’s a red flag, so look closely at your loan terms.

The Basics of Paying for School

Your COA (Cost of Attendance) is estimated by universities using these factors:

Tuition + Mandatory fees for course materials, Room & Board, Health Insurance, Personal Expenses

Schools include multiple estimates for singles, couples, and families. If you aren’t living on campus, already have health insurance, or have scholarships, you may not pay the full COA, as you won’t incur the full cost of the items listed. Keep this in mind when researching schools, and when making other decisions, like if you should move on-campus, get an apartment, or stay at home.

It’s likely you’re going to be applying for financial aid in order to save money on the tuition portion of the COA. There are many different kinds of financial aid, and categories vary between universities. You will typically hear about merit-based aid as soon as you’re admitted. Most schools will have you apply for need-based financial aid after you’ve been admitted and accepted their offer. It’s within merit-based aid that most people are awarded things like scholarships or gift-aid by the school. Need-based aid will be based on separate applications, like FAFSA, or the university’s own need-based financial aid form. It typically takes 3-4 weeks to hear back about need-based aid.

Once you hear back from your university’s aid office, you’ll be presented with an award letter. Think of your financial aid award letter as a first draft as opposed to a finished product. If you really want to go somewhere and the cost after scholarships and aid is too high, try asking for more. Schools won’t rescind your acceptance just because you ask politely for more financial help, so try! Check out our template for negotiating more financial aid here.

A few tips when asking for more aid:

• Be selective about asking. Make sure you really want to go to that program.
• It usually helps if you’ve gotten into more than one school and can credibly tell one school that you’d choose it if you had more aid.
• You’ve already been accepted. They won’t change their minds because you ask for some help politely. So make sure to ask.

Now that that's out of the way, we can talk about the next step, which is taking out loans to cover what scholarships, merit-aid, and need-based aid won't cover.

Graduate students have options when it comes to borrowing student loans. You can take out federal student loans, private student loans, or mix and match depending on the rates you receive.

Start by applying to FAFSA, which determines your eligibility for things like additional grants and work-study. Schools use FAFSA to gauge your financial situation; applying is a great way to make sure you get access to the aid you are eligible for and don't end up over-borrowing.

From there, the math changed for the 2026-27 school year. Federal Direct Unsubsidized loans are capped at $20,500 per year ($100,000 aggregate) for most graduate programs and $50,000 per year ($200,000 aggregate) for professional programs, at 8.07% plus a 1.057% origination fee. Grad PLUS loans, which used to cover anything above that cap, are no longer available to new borrowers after July 1, 2026. For most graduate students that leaves a funding gap that private loans have to fill.

Private loans price you based on your credit worthiness, so if you have a good score (650+) you will likely get a better deal in the private market -- often better than the federal rate, and without an origination fee. Juno negotiates with multiple lenders on behalf of our members to bring those rates down further, and our partners charge no application or origination fees. The tradeoff is that you give up federal protections like Income-Driven Repayment and Public Service Loan Forgiveness, so weigh the savings against where you expect your career to go.

If you're a DACA student, financing an education may be tricky, but not impossible. Check out our DACA-specific guide here.

After you've borrowed and your loan has been disbursed, we highly recommend remaining organized from the get-go. That means organizing your loans even before you graduate, and knowing when your payback period starts, what kind of loans you've taken out, and where they're held. That way, you won't be blindsided by payments after your grace period.

Refinancing: The Low Down

What do you do after graduating? Well, you start having to pay back your loans. However, there is a way to save money through this process too, and that's refinancing. Refinancing basically means to finance (something) again, typically by taking out a new loan at a lower interest rate. The new, cheaper loan, pays off the old loan, and you save on the overall loan cost while likely lowering your monthly payment.

When you first take out a loan, the interest rate is set by a variety of factors including your ‘riskiness’ – the likelihood you’ll pay it back. Once you have a steady income, your ‘risk’ is reduced and lenders are more willing to give you a better deal. Refinancing usually works best for graduates who have Unsubsidized Direct Loans, Graduate PLUS loans, and/or private loans. Refinancing federal loans may forfeit certain perks such as public service forgiveness and economic hardship programs.

It’s important to keep in mind what your career plans are and how those may affect your federal loans. If you are going into public service, you may want to keep your federal loans so that you may qualify for Public Service Loan Forgiveness.