$75,000 of graduate debt costs more than $75,000 of undergraduate debt. Here's the gap.
Graduate loans carry a higher statutory interest rate than undergraduate loans, and they're not eligible for subsidized status, which means interest accrues from disbursement rather than from graduation. Two borrowers owing the same amount can be on materially different trajectories depending on which degree produced the debt.
On a $60,000 income, $75,000 in student loans runs $250 a month on RAP, the cheapest payment, or $852 on Standard, which costs the least overall. Change the numbers to see your own.
Borrowers here have usually finished a master's, an MBA or a two-year professional program, or combined undergraduate borrowing with graduate study. This also covers borrowers who took Grad PLUS loans to cover costs beyond the standard graduate limits, which carry a higher rate again.
$75,000 on the 7 plans open to you
On $40,000 a year
| Plan | Monthly | Total | Years | Forgiven |
|---|---|---|---|---|
| IBR (loans from July 2014 onward) | $134 | $59,601 | 20.0 | $166,682 |
| Standard 10-year | $852 | $102,285 | 10.0 | - |
| Graduated | $522 | $108,980 | 10.0 | - |
| Repayment Assistance Plan | $100 | $119,490 | 30.0 | $31,822 |
| Tiered Standard Plan | $560 | $134,415 | 20.0 | - |
| Income-Contingent Repayment Ends 2028-07-01 |
$401 | $144,391 | 19.8 | - |
| Extended | $507 | $152,203 | 25.0 | - |
On $60,000 a year
| Plan | Monthly | Total | Years | Forgiven |
|---|---|---|---|---|
| Standard 10-year | $852 | $102,285 | 10.0 | - |
| Income-Contingent Repayment Ends 2028-07-01 |
$734 | $108,566 | 12.1 | - |
| Graduated | $522 | $108,980 | 10.0 | - |
| IBR (loans from July 2014 onward) | $300 | $113,342 | 20.0 | $63,323 |
| Tiered Standard Plan | $560 | $134,415 | 20.0 | - |
| Repayment Assistance Plan | $250 | $146,421 | 21.9 | - |
| Extended | $507 | $152,203 | 25.0 | - |
On $85,000 a year
| Plan | Monthly | Total | Years | Forgiven |
|---|---|---|---|---|
| Standard 10-year | $852 | $102,285 | 10.0 | - |
| Income-Contingent Repayment Ends 2028-07-01 |
$752 | $108,321 | 12.0 | - |
| Graduated | $522 | $108,980 | 10.0 | - |
| Repayment Assistance Plan | $567 | $112,285 | 11.9 | - |
| IBR (loans from July 2014 onward) | $509 | $124,044 | 15.2 | - |
| Tiered Standard Plan | $560 | $134,415 | 20.0 | - |
| Extended | $507 | $152,203 | 25.0 | - |
Where your money goes
On Standard 10-year, the plan that costs you least at $60,000 a year.
What the balance does over time
A line that stays flat or climbs is a plan where the payment isn't covering the interest.
The rate difference and what it costs
For the current award year, undergraduate loans are set at 6.52%, graduate loans at 8.07% and PLUS loans at 9.07%. Those spreads are statutory, they reset annually against Treasury yields, and they apply for the life of each loan you took.
On $75,000 the difference between the undergraduate and graduate rate is well over a thousand dollars a year in interest at the outset. Across a standard term it compounds into a five-figure difference in total cost for the same nominal balance.
Because each year's loans carry that year's rate permanently, a borrower who studied across several years holds a portfolio of loans at different rates rather than one blended debt. This is worth knowing before you direct an overpayment, because targeting the highest-rate loan first is materially better than spreading it evenly.
No subsidy means interest from day one
Subsidized undergraduate loans don't accrue interest while you're enrolled at least half time. The government covers it. Graduate loans have no such provision, so interest begins on the day the money is disbursed and continues through your entire program.
For a two-year master's degree that's two years of accrual before your first payment is due, plus the grace period after. On $75,000 borrowed across the program, several thousand dollars of interest exists before you've earned anything from the degree.
That accrued interest typically capitalizes when repayment begins, joining the principal and generating interest of its own from then on. This is why graduate borrowers often see a starting balance noticeably above the sum of what they borrowed, and it's not an error on the statement.
Paying even small amounts toward interest during study changes this meaningfully, because it reduces the amount that capitalizes. A part-time job covering the interest during a two-year program is worth considerably more than the same money earned after graduation.
Whether the degree earns its rate back
The honest test for graduate debt is whether the earnings difference attributable to the credential exceeds the total cost of borrowing at these rates. For some fields that's straightforward and the answer is clearly yes. For others the premium is small, uncertain or concentrated in a narrow set of employers.
If you're already holding the debt, this is retrospective and not useful except as a guide to what comes next: it argues against further graduate borrowing on the assumption that the pattern repeats, and it argues for taking the earnings premium seriously when it does arrive by directing it at the balance rather than absorbing it into spending.
Graduate borrowers do have one structural advantage. Higher earnings make aggressive repayment realistic in a way it's not for undergraduate borrowers with the same balance, and the interest saved by clearing an 8.07% loan quickly is larger than the same effort against a 6.52% one.
The mistake: spreading overpayments evenly across loans
A graduate borrower typically holds several loans at several different rates: undergraduate loans at one figure, graduate loans higher, PLUS loans higher still. Servicers default to applying extra payments proportionally across all of them, which means most of your overpayment lands on the cheapest debt. Directing every spare dollar at the highest-rate loan until it's gone, then moving to the next, clears the same total balance faster and cheaper for exactly the same monthly outlay. It requires a specific instruction to the servicer, and it's one of the few genuinely free improvements available in this system.
$75k questions
What's the interest rate on graduate student loans?
8.07% for the current award year, against 6.52% for undergraduate loans and 9.07% for PLUS. Rates are set each year and fixed for the life of that year's loan.
Do graduate loans accrue interest while I study?
Yes. Graduate loans are unsubsidized, so interest accrues from disbursement onward and typically capitalizes when repayment begins.
Are graduate loans eligible for forgiveness?
Yes, for both Public Service Loan Forgiveness and income-driven forgiveness on the same terms as undergraduate loans. Grad PLUS loans are included; Parent PLUS loans are treated differently.