Most graduate students take out loans, for their education. In fact, 61 percent of PhD students and 89 percent of PsyD students will graduate with debt, according to APA's 2009 Doctorate Employment Survey.
On average, PhD students take out $50,000, compared with PsyD students, who take out $120,000, APA found.
The vast majority of graduate student loans are federal: 5 percent of graduate students at private schools and 3 percent of graduate students at public schools took out private loans, according to the College Board in October 2013.
Federal loans are usually more attractive to students because they have lower interest rates and offer repayment protection. Students who need more money than is offered by a federal loan — such as those in dual-degree programs — may also need to get private loans on top of their federal loans.
Before applying for loans, consider these questions:
- Are you eligible for federal loans? To receive federal loans, you must be enrolled in a school or institution that participates in the Federal Direct Loan Program. Not all schools participate in the Federal Direct Loan Program, but students can find out by asking the school's financial aid office, says Garth Fowler, PhD, associate executive director of APA's Office of Graduate and Postgraduate Education and Training.
- How much will you need? The amount you need to borrow depends upon tuition and fees, the cost of living while in school and the types of financial assistance your program offers. Many psychology programs offer financial assistance in the form of teaching assistantships, research assistantships or scholarships. Teaching and research assistantships often come with tuition remission, which means the university or department pays for part or all of tuition. Psychology departments and programs that offer only PhD programs tend to give more financial assistance than programs that offer only PsyD programs, Fowler says. The amount students will need also depends on the type of psychology degree the student is pursuing. According to the most recent Doctoral Employment Survey, students who graduated from clinical programs had the highest amount of debt, while those in cognitive programs carried the least amount of debt, he adds.
- How much federal money can you borrow? Graduate students can borrow up to $138,500, but that cap also includes any federal loans you may have taken out as an undergrad. Students who are pursuing health-care professions, including clinical psychology, have higher loan caps, says Jenny Smulson, APA's senior legislative and federal affairs officer. Students in qualifying health fields can borrow an additional $20,000 per year and have a limit of $224,000. It is important to check with the school's financial aid office to see if the program qualifies for the increased limit, says Eddy Ameen, PhD, APAGS assistant director. Students can visit StudentAid for more information.
- Where can I get a private loan? Private loans are offered through banks, credit unions and private companies. Private loans offer variable interest rates and fixed interest rates. Ameen recommends that students thoroughly investigate the terms of these loans and the customer service record of the lender. One source for this information is the Consumer Finance Protection Bureau,.