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A Master of Business Administration (MBA) is a highly valued degree in the business world and can put you on a path to a successful and high-paying career. However, these degrees don’t come cheap. In fact, the total cost of an MBA in the U.S. can range from around $78,000 (for in-state students at a public school) to $270,000 (for a private top tier university), including full-time tuition, mandatory fees, textbooks, supplies, technology costs, and living expenses.

Is it worth it? The answer depends on myriad factors, including what school you go to, what financial aid you qualify for, and your future career goals. Read on for a closer look at the real costs and benefits of getting an MBA.

MBA School Requirements

To be accepted into an MBA program, students typically need to submit proof of a bachelor’s degree from an accredited institution, a personal statement, letters of recommendation, and a resume. Many business schools also require a standardized test score such as the GMAT or GRE.

Once enrolled, full-time MBA students generally need to complete 60 credits over two years. Some accelerated MBA programs may be finished in as little as one year. A part-time MBA program is designed to accommodate working students and generally takes three to five years to complete.

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MBA School Costs

How much an MBA costs will depend on a variety of factors, including school prestige, location, whether the school is public or private, and the program format (e.g., full-time, part-time, or online). MBA costs are also influenced by a student’s ability to qualify for financial aid, scholarships, and employer assistance.

Private and Public MBA Tuition

Going to a public university as an in-state student is often the most cost-effective way to get an MBA. For example, 2025-26 tuition at the University of Michigan’s Ross School of Business was $18,962 for first-year in-state students, compared to $64,556 for nonresidents. Private business schools typically run even higher. For example, the tuition at Columbia Business School was $91,172 for first-year MBA students in 2025-26.

Total Cost of an MBA

The total cost of an MBA degree means more than just tuition expenses. Many MBA students will have to pay for living expenses, textbooks, transportation, and extracurricular activities. This more comprehensive expense list is used to calculate the total cost of attendance.

Additional Expenses (Fees, Books, Housing)

Here’s a breakdown of other approximate costs you can expect to pay per year when pursuing an MBA degree:

•   Fees: $240-$6,470

•   Books & Supplies: $1,200

•   Food and Housing: $16,250-$28,500

•   Loan Fees: $64

•   Opportunity Costs: $160,000 or two years of missed salary

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How Much Does an Online MBA Cost?

Relocating or commuting may not be feasible for all prospective MBA students. Choosing an online MBA program can offer more flexibility and a lower overall cost for some students. Tuition for an online MBA degree varies widely, ranging anywhere from $11,000 to $126,000 per year depending on the school.

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Cost-Benefit Analysis of Getting an MBA

At the lower end, tuition costs for business schools may come in around $16,400 (for an in-state student at a public university). At the higher end, it can run around $90,000 a year. Total cost of attendance, including food and housing, books, supplies, and other living expenses put the price tag even higher.

Even considering the increase in salary for those who graduate prestigious programs — Yale graduates make a median base salary of $175,000 a year — those upfront costs of tuition can be intimidating.

When weighing costs and benefits, you’ll want to also consider that many MBA programs offer scholarships, based on merit or need. NYU reports awarding merit-based scholarships to 20% to 25% of students, while around 50% of MBA students at Stanford receive need-based aid averaging $50,000 per year.

Average Salary Boost After Graduation

Generally, you can expect a nearly 70% increase in your salary after completing an MBA. Research suggests that MBA graduates earn around $120,000 per year on average, which is $50,000 higher than the average salary of graduates with only a bachelor’s degree.

Keep in mind that a number of things can influence your salary after graduating with an MBA, including the school you attended, the industry you work in, your location, and your pre-MBA salary. Plus, your salary is typically only your base pay. Many jobs for MBA graduates also offer a hiring bonus, stock options, relocation funds, and other high-value benefits, which can significantly boost your earnings.

Time to Break Even on Investment

How long it will take you to break even on your investment in an MBA will depend on the cost of your program and the career you choose after graduation. On average, MBA graduates start seeing a return on their investment (ROI) in five to six years.

Ways to Pay for Your MBA

Assuming you don’t have six figures in savings you can tap to pay for business school, you may need to get creative to cover the costs. Here are some ways to pay for your MBA.

Employer Sponsorship

Employer sponsorship for an MBA involves companies partially or fully funding an employee’s degree in exchange for continued service, typically for one to three years post-graduation. Some employers may require you to sign an agreement that you will repay funds if certain conditions aren’t met.

Student Loans

Depending on your financial situation, you may want to consider applying for a student loan, whether private or federal, to pay for your MBA.

Federal Student Loans

MBA students may borrow up to $20,500 per year in Direct Unsubsidized Loans from the Federal government. The interest rate is currently fixed at 7.94% for loans dispersed by July 1, 2026.

While Federal Grad PLUS Loans will no longer be available as of July 1, 2026, borrowers who already received a Grad PLUS loan before June 30, 2026, can continue borrowing under current terms through the 2028-29 academic year.

To apply for federal student loans for graduate school, you need to complete the Free Application for Federal Student Aid (FAFSA®) form.

Private Student Loans

Private student loans — available through banks, credit unions, and online lenders — can be a key resource for bridging the gap when federal aid, scholarships, and grants fall short. Unlike federal loan options, these loans generally require a credit check and often a cosigner. While terms vary by lender, students can typically borrow up to the full cost of attendance for an MBA program. In addition, some lenders offer specialized MBA loans with tailored repayment terms. Just keep in mind that private student loans generally don’t offer the same borrower protections as federal student loans (such as income-driven repayment plans or loan forgiveness options).

💡 Quick Tip: Master’s degree or graduate certificate? Private or federal student loans can smooth the path to either goal.

Scholarships and Fellowships

Many business schools automatically consider applicants for merit scholarships based on GMAT/GRE scores, previous educational achievements ,and professional experience. A number of top schools also offer sizable need-based fellowships, which can significantly reduce your out-of-pocket expenses.

MBA scholarships are also available through private organizations and foundations. This type of funding may be awarded based on identity or affinity (such as being a woman or a Native American). Some business schools publish a list of scholarships awarded by external sources, including the amounts and requirements.

Graduate Assistantships or Part-Time Work

Getting a graduate assistant position can also help you pay for business school. These positions typically involve assisting faculty with research or administrative activities and may offer a stipend or hourly wage. Alternatively, you might be able to work as a teaching assistant (TA) or pick up a side gig or part-time job while studying to help you pay for MBA school.

Factors to Consider When Choosing an MBA Program

If you’re trying to decide which MBA program is right for you, here are two key factors to consider:

ROI by Program Type and School Ranking

When comparing business schools, it can be helpful to research the average ROI. This is typically calculated by dividing the average earnings of recent graduates by the average student debt incurred. According to a July 2025 U.S News analysis, these schools offer some of the best ROIs:

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Program Format: Full-Time, Part-Time, or Executive MBA

You’ll also need to decide whether you want a full-time, part-time, or Executive MBA program. Here’s a closer look at each option:

•   Full-Time MBA: This can be a good choice for any student looking for full immersion in the student experience. It can also be ideal for early-career professionals looking for a significant career pivot (such as switching from engineering to investment banking or consulting). Full-time enrollment often provides greater access to scholarships, summer internships, and on-campus recruiting opportunities. However, it requires two years of lost income and often comes with high tuition fees.

•   Part-Time MBA: Studying part-time can be a good choice for mid-career professionals who want to move into management or get a promotion within their current field without losing income. Part-time programs offer flexibility scheduling, allow you to keep your salary, and may give you access to tuition assistance. On the downside, it can take three to five years to complete your degree. Plus networking/internship opportunities are typically more limited compared to full-time tracks.

•   Executive MBA (EMBA): An EMBA is specifically designed for mid-to-senior-level working professionals. It offers you a chance to advance your leadership skills without quitting your job, typically through a part-time, flexible format (such as every other weekend). While graduates receive the same Master of Business Administration credential as traditional MBA students, the program’s structure and focus are tailored to working executives. Tuition is often higher than a traditional MBA but is sometimes employer-sponsored.

The Takeaway

The true cost of an MBA degree extends beyond tuition to include fees, living expenses, and the opportunity cost of lost income. While the price tag can be significant, ranging from $78,000 to $270,000 for two years of full-time study including living expenses, the investment often yields a substantial return, with graduates seeing an average salary boost of nearly 70%.

By carefully evaluating the cost of attendance, exploring funding options like scholarships and loans, and considering the program’s potential ROI, prospective students can maximize their investment and make an informed decision about pursuing an MBA.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

How much does it cost to get an MBA?

How much an MBA costs depends on factors like school prestige, program format (e.g., full-time, part-time, or online), and location. The average total cost in the U.S. generally ranges from $78,000 to $270,000, which includes two years of tuition, mandatory fees, and living expenses. You can save money by choosing an online or part-time program from a public university. These avoid expensive living costs and often have lower tuition rates than full-time, on-campus programs, while allowing you to keep working.

Is an MBA worth it?

An MBA can be worth it if it aligns with your career goals, provides valuable skills, and offers strong networking opportunities. It often leads to higher salaries and better job prospects, but the return on investment depends on the program’s reputation and your personal career trajectory.

Is an MBA worth it after 40?

Yes, an MBA can still be a valuable investment after age 40, especially if you are a mid-to-senior-level professional targeting an Executive MBA (EMBA) to advance into leadership roles. An EMBA is specifically designed for working executives and can boost your salary and broaden your network without requiring you to take a career break. The key is to choose a program that aligns with your specific career goals and offers a strong return on investment (ROI) for your current stage in life.

What’s the average student loan debt for MBA graduates?

The average debt for an MBA graduate is $76,996, according to the Education Data Initiative. Roughly 58% of MBA holders have student loan debt.

Do online MBA programs offer the same ROI as in-person programs?

Online MBA programs can offer a comparable, and sometimes even better, return on investment (ROI) compared to in-person programs. While in-person MBAs from top-tier schools often lead to higher immediate post-graduation salaries, online MBAs often provide a faster break-even point by minimizing upfront expenses and allowing students to remain employed while studying.

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SOISL-Q126-006

The median annual salary for delivery drivers in 2024 was $42,770, according to the Bureau of Labor Statistics. However, data from Zippia published in 2026 suggests drivers can earn up to $62,000 depending on location and experience. What’s more, the United Parcel Service (UPS) reports that the average overall compensation package for a full-time UPS package delivery driver is $145,000.

For those who like working independently and being behind the wheel, a career as a UPS driver could be a good fit. Keep reading for a breakdown of how much UPS drivers can earn and what this role entails.

What Are UPS Drivers?

UPS drivers pick up and deliver packages on a designated driving route for UPS, a global package delivery and logistics company. They can have local or long-haul routes that include stops at residential and business addresses. You may well be familiar with the brown UPS trucks arriving and departing from your home or workplace.

Being a UPS driver can be a good option for introverted people, since much of the day is spent solo, though there can be some social interaction when dropping off packages and getting signatures for them. Obviously, a UPS driver will need to be comfortable behind the wheel, driving in heavy traffic and unknown locations, and ensuring that parcels get from point A to point B within deadlines.

In terms of qualifications, you will likely need to be at least 21 years old, have a valid noncommercial driver’s license, a clean driving record, and be able to physically move packages of up to 70 pounds. If you have these qualifications, being a UPS driver can be a well-paying job that doesn’t require a college degree.

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How Much Do Starting UPS Drivers Make a Year?

If someone is new to working as a UPS driver, they shouldn’t expect to earn a top salary just yet. The entry-level pay for a full-time UPS delivery driver is approximately $23.00 per hour and $21.00 per hour for part-time. These figures are well above the national minimum wage.

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What Is the Average Salary for a UPS Driver?

You’re probably curious about how much a UPS driver can make annually or on a salary vs. hourly rate. The average hourly pay for UPS drivers can range from $19.56 to $30.05, depending on the state. The table below illustrates how UPS delivery drivers’ average annual and hourly pay can vary by state.

What Is the Average UPS Driver Salary by State for 2026

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

UPS Driver Job Considerations and Benefits

A job as a UPS driver can appeal to those who have not earned a college degree and those who enjoy driving. However, this can be a physically demanding job given that you are behind the wheel and carrying packages all day, and it may be stressful to be in traffic or dealing with the pressures of getting packages to their destination. Many workers, however, will enjoy the independence.

Along with receiving a salary, UPS drivers also gain access to valuable employee benefits. This table highlights the current benefits for full-time UPS drivers.

Pros and Cons of a UPS Driver’s Salary

There aren’t any notable cons associated with the UPS driver salary. These roles are in high demand and often regarded as having competitive pay and great employee benefits. The main questions may be whether the job suits a particular employee’s needs and if they enjoy the challenges of the job, such as driving all day.

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The Takeaway

The average full-time delivery driver in the US makes around $42,000 a year, while UPS package delivery drivers average $40,000 to $62,000. UPS salaries vary by location and experience. In addition to pay, UPS drivers gain access to valuable employee benefits such as employer-sponsored health care, paid time off, and a pension plan. These benefits can help people balance their budget and enjoy a good quality of life, personally and financially.

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FAQ

Can you make 100K a year as a UPS driver?

Yes, it may be possible to make $100,000 or more a year as a UPS driver, depending on where you work, how long you have been on the job, and what your specific role is. UPS drivers earn good salaries, and on average, full-time drivers earn a compensation package of up to $145,000, according to UPS.

What factors influence UPS driver pay?

UPS driver pay can vary based on what state you work in, your level of seniority, and your particular role. Depending on your position, other factors may include hours worked, the route type, and your qualifications.

Do people like being UPS drivers?

Many people enjoy being a UPS driver due to the independent and consistent nature of the work. Those who prefer to spend their days on their own versus working on a team could enjoy this role.

Is it hard to get hired as a UPS driver?

Because UPS drivers earn good salaries and have robust benefits packages, these can be competitive roles to land. That said, UPS hires drivers across the country, so there are many job opportunities with this company.

Is it worth becoming a UPS delivery driver?

Being a delivery driver sometimes involves lifting heavy packages. This, together with sitting in the same position while driving all day, can make it a physically demanding job. However, UPS benefits can make it worthwhile.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

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SORL-Q126-003

Graduate school can be an exciting step toward advanced knowledge, professional growth, and long-term career opportunities, but it often comes with a high price tag. Tuition, fees, research costs, and living expenses can quickly add up, leaving many students searching for ways to fund their education without accumulating excessive debt. One of the most prestigious and flexible forms of graduate funding is a graduate fellowship.

A graduate fellowship is a competitive award that provides financial support to students pursuing master’s, doctor, or postdoctoral studies. Unlike loans, fellowships do not need to be repaid, and unlike assistantships, they typically do not require a work commitment from the recipient. Fellowships may be offered by universities, government agencies, private foundations, or corporations, and they are often awarded based on academic merit, financial need, and research potential.

As with other scholarships and grants, there’s often steep competition for these awards. Here’s a guide to graduate fellowships and how to go about applying for one.

Internal vs External Graduate School Fellowships

Graduate fellowships generally fall into two broad categories: internal and external. Internal fellowships are awarded directly by a university or academic department. These fellowships are often tied to admission decisions, meaning applicants are automatically considered when they apply to a graduate program. Internal fellowships may be funded by the institution itself, alumni donations, or departmental endowments.

External fellowships, on the other hand, are awarded by organizations outside the university. These include government agencies, nonprofit foundations, professional associations, and private corporations. External fellowships tend to be highly competitive but can offer generous funding, greater prestige, and more flexibility in how funds are used.

Both types of fellowships can be valuable. Internal fellowships may be easier to access and better aligned with a specific program, while external fellowships can provide broader recognition and sometimes allow students to choose where they want to study.

💡 Quick Tip: You can fund your education with a competitive-rate, no-fees-required private student loan that covers up to 100% of school-certified costs.

Types of Graduate School Fellowships

Graduate fellowships come in several forms. Each type is designed to support students with different backgrounds, goals, and academic interests.

Merit-Based Fellowships

Merit-based fellowships are awarded primarily on academic excellence and demonstrated achievement. Selection committees may consider undergraduate and graduate GPA, standardized test scores, publications, conference presentations, leadership experience, and overall academic promise.

These fellowships are common in research-intensive fields and are often used to attract top students to competitive programs. Because they focus on achievement rather than financial circumstances, merit-based fellowships can be highly competitive, especially at prestigious universities.

Need-Based Fellowships

Need-based fellowships are awarded to students who demonstrate financial need. Applicants may be required to submit financial documentation, such as income statements or information from financial aid forms. These fellowships are designed to reduce financial barriers and help students from lower-income backgrounds pay for graduate school.

While need-based fellowships may still consider academic standing and research focus, financial circumstances play a key role in the selection process.

Research and Project-Based Fellowships

Research and project-based fellowships support students working on specific research topics, creative projects, or applied initiatives. These fellowships are especially common in STEM fields, social sciences, humanities research, and public service-oriented disciplines.

Applicants are often required to submit a detailed research proposal outlining their objectives, methodology, timeline, and expected outcomes. These fellowships not only provide funding but also help students build research credentials and professional networks.

Applying for a Graduate Fellowship Program

Applying for a graduate fellowship requires careful planning, attention to detail, and a strong understanding of what selection committees are looking for.

Preparing a Strong Application Package

A competitive fellowship application typically includes transcripts, a resume or curriculum vitae, personal or research statements, and letters of recommendation. Each component should reinforce a consistent narrative about your academic goals, achievements, and potential impact.

Start preparing well in advance. Review application instructions carefully, follow formatting guidelines exactly, and ensure that all required materials are submitted by the deadline. Small errors or missing documents can disqualify an otherwise strong application.

Securing Strong Letters of Recommendation

Letters of recommendation play a crucial role in fellowship decisions. Choose recommenders who know your work well and can speak in detail about your academic abilities, research skills, and character. Faculty members, research supervisors, or professional mentors are often ideal choices.

Provide your recommenders with ample time and supporting materials, such as your resume, draft statements, and information about the fellowship. This allows them to write thoughtful, personalized letters that strengthen your application.

Tailoring Your Personal Statement

Your personal statement or statement of purpose is your opportunity to explain why you are a strong candidate and how the fellowship aligns with your goals. You generally want to avoid generic essays. Instead, tailor each statement to the specific fellowship, emphasizing values, missions, or priorities highlighted by the funding organization.

A strong statement clearly articulates your academic interests, career goals, and the broader impact of your work. Try to be concise, authentic, and focused on how the fellowship will enable your success.

What You Need to Know About Fellowships for Graduate Students

If you’re hoping to use a fellowship to help cover the cost of a graduate degree, here are some practical considerations to keep in mind.

Trump Administration’s Impact on Graduate Fellowships

Federal funding priorities can influence the availability and structure of certain graduate fellowships. During the Trump administration, some research funding areas experienced budget uncertainty or shifting priorities, particularly in environmental science, public health, and social research.

While many fellowship programs remained intact, policy changes highlighted the importance of diversifying funding sources. If you’re in or looking to go to graduate school, it’s a good idea to stay informed about how political and economic factors may affect fellowship availability, especially for federally funded programs.

Tax Implications of Fellowship Funding

Fellowship funding may be taxable, depending on how the funds are used. Generally, money applied directly to tuition and required fees is not taxable, while stipends used for living expenses (e.g., room and board, travel, non-required books, and personal computers) may be considered taxable income.

Because tax rules can be complex, it’s a good idea to review IRS guidelines and consider consulting a tax professional to avoid unexpected tax liabilities.

Balancing Fellowships With Other Financial Aid

Receiving a fellowship can affect eligibility for other forms of financial aid, such as grants and graduate student loans. Some institutions adjust financial aid packages when a student receives external funding.

Before accepting a fellowship, it is wise to speak with the university’s financial aid office to understand how different funding sources interact and whether combining them is permitted.

💡 Quick Tip: Master’s degree or graduate certificate? Private or federal student loans can smooth the path to either goal.

Strategies for Applying to a Graduate Fellowship Program

Here are some logistical considerations to keep in mind when considering and applying for fellowships opportunities.

Early Deadlines

Many applications for graduate fellowships are due in the fall for the following academic year, almost a full year in advance.

Staying organized and tracking deadlines is essential. Missing a deadline can mean waiting an entire year for the next opportunity.

Funding Duration

Fellowships vary in length. Some provide one year of support, while others offer multi-year funding contingent on satisfactory progress. Understanding the duration of funding is key to long-term financial planning.

Competition

Graduate fellowships are often highly competitive, particularly nationally recognized programs. Acceptance rates can be low, but competition shouldn’t discourage applicants. Applying to multiple fellowships can improve your overall chances of success.

Part-Time and Online Graduate Programs

Not all fellowships are available to part-time or online students. Many funding programs require full-time enrollment and on-campus participation. Students in nontraditional programs should carefully review eligibility requirements.

Postdoc Fellowships

For doctoral graduates, postdoctoral fellowships provide funding to continue research, public work, and gain professional experience. These fellowships can be a stepping stone to academic or research-focused careers.

Long-Term Career Prospects

Fellowships can bolster your resume and get the attention of prospective employers. As a graduate fellow, you’ve shown you’re motivated, disciplined, and serious about your focus of study. You’ve also shown you’re highly qualified and stood out from a pool of other candidates.

Graduate and postdoctoral fellows can go on to have successful careers as researchers, university professors, expert scholars, writers, and authors. They can also work in their specialty for a corporation, government agency, or at a nonprofit organization.

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How Fellowships Compare to Assistantships and Scholarships

Graduate students often choose between fellowships, assistantships, and scholarships, and each works in different ways.

Key Differences in Funding, Expectations, and Flexibility

Fellowships typically offer the most flexibility, as they often offer substantial funding with few or no work obligations. Assistantships provide funding in exchange for teaching or research duties. Graduate school scholarships are usually smaller awards and may be based on merit or need. They typically don’t have a service requirement and are often used to supplement other funding sources.

Which Option Is Best for Your Goals?

The best funding option depends on your priorities. Students focused on research independence may prefer fellowships, while those seeking teaching experience may benefit from assistantships. Many students combine funding types to create a balanced package that supports financial and professional goals.

The Takeaway

Graduate fellowships are one of the most powerful tools for funding advanced education without accumulating debt. They offer financial support, academic freedom, and professional prestige, making them highly sought after by graduate students across disciplines.

By understanding the different types of fellowships, preparing strong application materials, and planning for practical considerations like taxes and funding duration, students can significantly improve their chances of success. While the application process can be competitive and time-consuming, the long-term benefits of securing a graduate fellow often make the effort worthwhile.

With early preparation, strategic planning, and persistence, a graduate fellowship can be a powerful asset throughout graduate school and beyond.

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FAQ

Can I have more than one fellowship?

You can apply for multiple fellowships, but whether or not you can accept more than one will depend on the funder’s specific rules. For example, you may not be able to accept two fellowships with award periods that overlap or that are funded by the same organization. Before accepting any award, always confirm the rules regarding concurrent funding with the sponsoring entity.

Is a fellowship prestigious?

Yes, a fellowship is highly prestigious. It signifies that the recipient has been recognized for exceptional academic merit, research potential, or leadership by a competitive selection process, often involving national or international organizations. Receiving a fellowship can significantly enhance a student’s resume, open doors to professional networks, and validate their expertise and commitment to their field of study.

How do you find fellowships for graduate school?

To find graduate fellowships, start by checking with your university’s graduate school or academic department. They often manage internal awards and maintain lists of external ones. In addition, a number of universities (including Duke, Harvard, and UCLA) maintain public databases that any student can use to search for external fellowships. Also check the websites of foundations relevant to your field and online databases like ProFellow.

Do fellowships cover full tuition and living expenses?

Fellowships vary in what they cover. While some prestigious or large-scale fellowships may cover all tuition and fees, and provide a generous stipend for living expenses, others may only cover a portion of tuition or offer a modest stipend. The scope of funding depends entirely on the specific fellowship and the sponsoring organization. Always review the award letter and fellowship guidelines to understand exactly what costs are covered.

Can international students apply for graduate fellowships?

Yes, many graduate fellowships are open to international students. While many U.S. government-sponsored fellowships are restricted to citizens, there are numerous institutional and private opportunities available. It’s important to review the specific guidelines for each award.

Note that the Trump administration’s restrictive visa policies, social media vetting, and travel bans have reduced overall international enrollment at U.S. universities. This may create a strain on university budgets and, consequently, limit the availability of fellowships and financial aid for all graduate students.

Photo credit: iStock/AntonioSolano

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOISL-Q126-004

Paying for college often requires some form of student borrowing, but not all student loans work the same way. One of the biggest distinctions in the student loan system is between undergraduate and graduate borrowing. While both types of students may rely on federal and private loans, the rules, limits, and interest rates can vary significantly depending on your academic level.

Understanding these differences is especially important for student planning to move from an undergraduate program into graduate or professional school. Policy changes, borrowing caps, and eligibility requirements can dramatically alter how much aid you can access and how much debt you may be able to carry. With recent changes eliminating federal Grad PLUS loans starting in the 2026-27 academic year, graduate students will face a different borrowing landscape than in the past.

What follows is a comprehensive look at grad vs. undergrad loans and how students can plan strategically for higher education costs.

What Does Undergraduate Mean?

An undergraduate student is typically someone pursuing their first college degree beyond high school. This includes associate degrees (usually two years) and bachelor’s degrees (generally four years).

Undergraduates typically attend school full-time, though some choose to enroll part-time. Many are considered financially dependent on their parents, particularly for federal finance aid purposes. This dependency status influences how much aid they can receive and which loans are available to them.

💡 Quick Tip: Make no payments on SoFi private student loans for six months after graduation.

What Does Graduate Mean?

A graduate student is someone who has already earned a bachelor’s degree and is pursuing advanced education, such as a master’s degree, doctoral degree, or professional degree (such as law or medicine). Graduate programs are typically more specialized and academically demanding than undergraduate programs. They also tend to be more expensive, though scholarships and assistantships can offset costs.

Differences Between Undergraduate and Graduate Programs

Undergraduate and graduate programs not only differ academically, but also financially. Below are key differences between student loans for undergraduates and graduates.

1. Dependency Status

One of the biggest differences between undergraduate loans and loans for graduate students is dependency status. Undergraduate students may be classified as either dependent or independent, depending on factors such as age, marital status, and whether they have dependents of their own.

Dependent undergraduates must report parent income and assets on the Free Application for Federal Student Aid (FAFSA®), which can affect their eligibility for need-based aid. Independent undergraduates do not need to include parental financial information.

Graduate students, by contrast, are always considered independent students for federal aid purposes. This means they do not need to provide parents’ financial information, and only the student’s income and assets are considered when determining eligibility.

2. Interest Rates on Federal Student Loans

Federal student loan interest rates differ depending on whether the borrower is an undergraduate or graduate student. Undergraduate students qualify for lower interest rates on federal loans than graduate students. For loans disbursed between July 1, 2025 and July 1, 2026, undergraduates borrowers pay 6.39% on Direct Subsidized Loans and Direct Unsubsidized Loans, whereas graduate or professional students pay 7.94% for Direct Unsubsidized Loans (they don’t have access to Unsubsidized Loans).

Because graduate students no longer qualify for subsidized loans, interest begins accruing immediately upon disbursement, increasing the total cost of borrowing.

3. Loan Type

Undergraduate students have access to both Direct Subsidized and Direct Unsubsidized Loans. Subsidized loans are especially valuable because the federal government covers the interest while the student is enrolled at least half-time and for six months post graduation.

Graduate students, on the other hand, are only eligible for Direct Unsubsidized Loans. Starting July 1, 2026, federal Grad PLUS loans will no longer be available, removing a major borrowing option that previously allowed graduate students to cover remaining education costs beyond unsubsidized loans loan limits. Borrowers who already received a Grad PLUS loan before June 30, 2026, however, can continue borrowing under current terms through the 2028-29 academic year.

4. Borrowing Limits

Borrowing limits are another major difference between undergraduate vs. graduate school loans. Undergraduate students face relatively low annual lifetime loan caps, especially if they are classified as dependent students. These limits are designed to prevent excessive debt early in a student’s academic career.

Undergraduate students can borrow between $5,500 and $12,500 annually in federal Direct Subsidized/Unsubsidized Loans, depending on their year in school and dependency status, with total aggregate limits of $31,000 for dependent students and $57,500 for independent students.

Graduate students can access $20,500 per year in Unsubsidized Loans with an aggregate limit of $138,500 (including all federal loans received for undergraduate study). Effective July 1, 2026, students in graduate programs (master’s, PhD, etc.) will have the same annual borrowing limit ($20,500) but face an aggregate limit of $100,000 (not including loans borrowed as an undergraduate); students in professional programs (medical, dental, law, pharmacy, etc.) will have a $50,000 annual borrowing limit and a $200,000 lifetime borrowing limit (not including loans borrowed as an undergraduate).

Without access to Grad PLUS loans (which cover the full cost of attendance), new graduate student borrowers may find that federal loans alone are not sufficient to cover the full cost of attendance, particularly at more expensive private universities and professional schools.

Recommended: Student Loan Payment Calculator

5. Interest Rates on Private Student Loans

Private student loan interest rates are determined by the lender and are based on factors such as credit score, income, and debt-to-income ratio. Undergraduate students often need a cosigner — typically a parent — to qualify for competitive private loan rates due to limited credit history. Rates on private student loans can sometimes be lower than federal rates, but you generally need excellent credit to qualify for the lowest rates.

Graduate students may qualify for private graduate loans on their own, especially if they have established credit or stable income.

Interest starts accruing immediately after loan disbursement, and you may have to start making payments while you’re still in school (policies vary by lender). In addition, private student loans lack the same borrower protections that come with federal student loans, such as income-driven repayment and federal forgiveness programs.

6. Student Loan Refinancing

Student loan refinancing allows borrowers to replace one or more existing loans with a new loan, ideally at a lower interest rate. Both undergraduate and graduate borrowers can refinance. Eligibility and terms depend on lenders’ criteria, which may include credit, income, and loan details.

Undergraduates may choose to refinance after graduation once they have steady income and good credit. Graduate borrowers, who often accumulate larger balances, may refinance to reduce monthly payments or interest costs. However, refinancing federal loans into private loans eliminates access to federal benefits, which may be particularly risky for graduate student borrowers with high debt and uncertain income.

7. Federal Grants

Federal grants are far more accessible to undergraduate students than to graduate students. Programs like the Pell Grant are designed specifically for undergraduates with significant financial need and do not require repayment.

Graduate students generally do not qualify for federal grants, with limited exceptions for specific programs or fields of study. As a result, graduate funding relies more heavily on loans, assistantships, and employer support.

8. Eligibility for Income-Driven Repayment Plans

Both undergraduate and graduate federal student loan borrowers are eligible for income-driven repayment (IDR), which caps monthly payments based on income and family size. An income-driven plan also extends your loan term to 20 or 25 years. If your federal student loans aren’t fully repaid at the end of the repayment period, any remaining loan balance may be forgiven.

There are currently three IDR plans, but borrowers who take out loans on or after July 1, 2026 will only have access to one income-based repayment plan — the Repayment Assistance Plan (RAP). Under RAP, monthly payments will be calculated as a percentage of the borrower’s adjusted gross income minus $50 per month per dependent. RAP provides loan forgiveness after 30 years of qualifying payments.

While IDR plans can provide relief, they may result in higher total interest costs over time. Borrowers should carefully weigh the long-term implications, especially if they expect income growth after completing a graduate degree.

9. Availability of Parent PLUS vs. Grad PLUS Loans

Another important distinction is who can take out loans on a student’s behalf. Parents of dependent undergraduate students may access Parent PLUS loans to help cover education costs not met by other aid. Parent PLUS loans are not available to parents of dependent graduate students.

Graduate students previously had access to Grad PLUS loans, which allowed them to borrow up to the full cost of attendance. However, Grad PLUS loans will no longer be available starting on July 1, 2026. This policy change significantly limits federal borrowing options for graduate and professional students and increases the importance of alternative funding strategies.

💡 Quick Tip: Parents and sponsors with strong credit and income may find more-competitive rates on no-fees-required private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

Thinking Outside the Box: Paying for Graduate School

With fewer federal loan options available, graduate students may need to be more creative in financing their education.

Becoming a Teaching or Research Assistant

Many graduate programs offer teaching assistantships (TAs) or research assistantships. These positions often provide an hourly or monthly salary, tuition waiver, and/or stipend. In exchange, students assist with teaching undergraduate courses or conducting research alongside faculty members.

Assistantships can significantly reduce the need for student loans while also providing valuable academic and professional experience.

Working Full-Time as a Grad Student

Some students choose to work full-time while pursuing graduate school part-time or through flexible programs. While demanding, this approach allows students to pay tuition as they go and minimize borrowing.

Online and evening programs have made this option more feasible, particularly for working professionals seeking career advancement rather than a complete career change.

Finding Scholarships

Scholarships are not just for undergraduates. Many organizations, professional associations, and universities offer scholarships specifically for graduate students. These awards may be merit-based, need-based, or tied to a specific field of study.

Although scholarships may not cover the full cost of graduate school, stacking multiple smaller awards can significantly reduce a student’s dependence on loans.

Utilizing Employer Tuition Assistance Programs

Employer tuition assistance is an often-overlooked benefit. Many employers offer tuition reimbursement or direct tuition payments for employees pursuing advanced degrees related to their job.

This benefit can significantly offset graduate school costs and may come with the added advantage of continued employment and income while studying.

Attending School Part-Time to Reduce Debt Load

Attending graduate school part-time can lower annual tuition costs and allow students to spread expenses over a longer period. While it may extend the time to degree completion, it can reduce reliance on loans and improve long-term financial stability.

The Takeaway

Undergraduate and graduate student loans differ in key ways, including loan types, interest rates, and borrowing limits. Undergraduate students generally benefit from lower interest rates, access to subsidized loans, and federal grants, while graduate students often face higher costs and fewer aid options.

With the elimination of federal Grad PLUS loans beginning in July 2026, graduate students will need to plan even more carefully. Understanding these differences — and exploring alternatives like assistantships, employer benefits, and scholarships — can help students make informed decisions and avoid unnecessary debt.

Whether you’re just starting college or considering graduate school, knowing how student loans change at each stage can help you plan more effectively for the years ahead.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

Do graduate students borrow more money than undergraduate students?

Generally, yes. Graduate and professional students tend to borrow significantly more than undergraduates. This is due to several factors, including higher tuition costs for advanced degrees, the fact that graduate students typically have fewer grant options, and higher federal borrowing limits. While undergraduate federal aggregate limits are relatively low ($31,000 to $57,500), graduate students have much higher limits on federal Unsubsidized Loans, and previously had access to Grad PLUS loans to cover the full cost of attendance.

Do graduate student loans have higher interest rates?

Yes, federal graduate student loans have higher interest rates than federal undergraduate student loans. For loans disbursed between July 1, 2025 and July 1, 2026, the rate for federal Direct Unsubsidized Loans for graduate students is 7.94%, while the rate for undergraduates is 6.39% for both subsidized and unsubsidized loans. Private loan rates vary based on creditworthiness, but some lenders may charge higher rates for graduate-level borrowing.

What is considered an undergraduate loan?

Undergraduate federal loans are financial aid options available to students pursuing an associate’s or bachelor’s degree. They primarily consist of federal Direct Subsidized and Direct Unsubsidized Loans, which offer lower interest rates and lower annual and aggregate borrowing limits than graduate loans. Private student loans are also available for undergraduates, often requiring a cosigner due to the borrower’s limited credit history.

Can graduate students get federal grants?

Generally, no. Federal grants, like the Pell Grant, are largely reserved for undergraduate students who demonstrate significant financial need. Graduate students rarely qualify for federal grants, with some exceptions for specific fields of study (like education). Graduate students typically rely on federal and private loans, as well as institutional funding like scholarships, fellowships, and assistantships, to finance their advanced education.

Are graduate student loans eligible for forgiveness programs?

Yes, graduate student federal loans are eligible for forgiveness programs, primarily through Income-Driven Repayment (IDR) plans and Public Service Loan Forgiveness (PSLF). IDR plans cap your monthly payments based on income and family size, with any remaining balance forgiven after 20, 25, or 30 years of qualifying payments. PSLF is an option for borrowers working full-time for a qualifying government or nonprofit organization, offering forgiveness after 10 years of payments. Refinancing federal loans into private loans, however, eliminates access to these federal forgiveness options.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOISL-Q126-005

Conventional loans — mortgages that are not insured by the federal government — are the most popular type of mortgage and offer affordability to homebuyers.

Private mortgage lenders originate and fund conventional loans, which are then often bought by Fannie Mae and Freddie Mac, publicly traded companies that are run under a congressional charter.

By buying and selling these mortgages, Fannie and Freddie help to ensure a reliable flow of mortgage funding.

Requirements for Conventional Loans

It can be confusing to know how to qualify for a mortgage.

Just realize, for one thing, that a higher credit score is usually required for a conventional home loan than for an FHA loan backed by the Federal Housing Administration, a type popular among first-time homebuyers.

Here are factors a lender will consider when sizing you up for a conventional loan.

Credit Score

You’ll usually need a FICO credit score of at least 620 for a fixed-rate or adjustable-rate mortgage.

The FICO score range of 300 to 850 is carved into these categories:

•   Exceptional: 800 to 850

•   Very Good: 740 to 799

•   Good: 670 to 739

•   Fair: 580 to 669

•   Poor: 300 to 579

In general, the higher your credit score, the better the interest rate you’ll be offered.

Down Payment

Putting 20% down is desirable because it means you can avoid paying for PMI, or private mortgage insurance, which covers the lender in case of loan default.

But many buyers don’t put 20% down. The median down payment on a home for first-time buyers is 10%, according to a recent study by the National Association of Realtors®.

Conventional loans require as little as 3% down for first-time homebuyers, and the down payment can be funded by a gift from a close relative; a spouse, fiancé or domestic partner; a buyer’s employer or church; or a nonprofit or public agency. The gift may require a gift letter for the mortgage.

Just keep in mind that the smaller the down payment, the higher your monthly payments are likely to be, and PMI may come along for the ride until you reach 20% equity.

Debt-to-Income Ratio

Your debt-to-income (DTI) ratio helps a lender understand your ongoing monthly debt obligations relative to your gross monthly income.

To calculate back-end DTI:

1.    Add up your monthly bills (but do not include groceries, utilities, cellphone bill, car insurance, and health insurance).

2.    Divide the total by your pretax monthly income.

3.    Multiply by 100 to convert the number to a percentage.

In general, lenders like to see a DTI ratio of 36% but will accept 43%.

The Fannie Mae HomeReady® loan, for lower-income borrowers, may allow a DTI ratio of up to 50%.

In any case, the lower your DTI ratio, the more likely you are to qualify for a mortgage and possibly better terms.

Loan-to-Value Ratio

The loan-to-value ratio (LTV) is the amount of the mortgage you are applying for compared with the home value. The higher the down payment, the lower the LTV ratio.

Fannie Mae typically sets LTV limits at 97% for a fixed-rate mortgage for a principal residence (think: 3% down) and 85% for a fixed-rate or adjustable-rate loan for a one-unit investment property.

When LTV exceeds 80% on a conforming loan, PMI will likely apply, although some borrowers employ a piggyback loan to avoid mortgage insurance.

Conventional Conforming Loan Limits

Many loans are both conventional and conforming — meaning they meet the guidelines of secondary mortgage market powerhouses Fannie Mae and Freddie Mac, which buy such mortgages and often package them into securities for investors.

Conventional conforming loans fall below limits set by the Federal Housing Finance Agency (FHFA) every year. Staying under a conforming loan limit often equates to a lower-cost mortgage because the loan can be acquired by Fannie and Freddie.

The conforming loan limits for 2026 in many counties in the contiguous states, Washington, D.C., and Puerto Rico rose with market prices:

•   One unit: $832,750

•   Two units: $1,066,250

•   Three units: $1,288,800

•   Four units: $1,601,750

In high-cost areas like Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the 2026 conforming loan limits are:

•   One unit: $1,249,125

•   Two units: $1,599,375

•   Three units: $1,933,200

•   Four units: $2,402,625

If you’re curious about your county’s specific conforming loan limits, you can check out this FHFA guide.

Nonconforming Loans

Word games, anyone? Nonconforming loans are simply mortgages that do not meet Fannie and Freddie standards for purchase. They usually take the form of jumbo loans and government-backed loans.

A homebuyer or refinancer who needs a mortgage beyond the FHFA limits can seek a jumbo mortgage loan. A jumbo loan is still a conventional loan if it’s not backed by a government agency; it’s just considered a “nonconforming” loan.

FHA, VA, and USDA mortgages — those backed by the Federal Housing Administration, Department of Veterans Affairs, and the U.S. Department of Agriculture — are also nonconforming loans.

Nonconforming mortgage rates for jumbo loans may be higher because the loans carry greater risk for lenders, but when the nonconforming loan is backed by the government, its rate might skew lower than conventional conforming rates.

The Takeaway

Conventional loan requirements are good to know when you’re looking at the most popular type of mortgage around. Would-be homebuyers will want to make sure their credit score, debt-to-income ratio, and down payment numbers are lined up as favorably as possible before pursuing their dream property.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

Are there any drawbacks to a conventional loan?

The main drawback to a conventional loan is that you will need to make some type of down payment on the property. It doesn’t need to be the 20% down payment that was common in decades past. But even a low down payment of, say, 3.5% could add up to tens of thousands of dollars given today’s home prices.

What’s the main reason I might not qualify for a conventional loan?

The most common reason someone might not qualify for a conventional home loan is usually related to credit — perhaps the applicant has a credit score below 620, or maybe there is some other significant warning sign on the credit report, such as a history of delinquencies or bankruptcy.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q126-022