The second part of the plan unveiled Wednesday will create a new low-interest loan program.

Graduate students across the University will now be eligible for the Harvard Educational Loan Program, a partnership with Citibank’s Student Loan Corporation offering student loans at below-market rates—currently set at 4 1/8 percent.

Students in the University’s graduate and professional schools currently borrow approximately $45 million per year from non-federal sources to help pay for tuition, fees and living expenses.

With the increased aid, students borrowing $40,000 over two years are estimated to save roughly $2,500.

Unlike most other loans, these will be available to international students as well as domestic students. Summers said this would particularly benefit the School of Public Health and the Kennedy School of Government, which draw a large number of students from foreign countries.

Along with the new scholarship and loan programs, Summers promoted Wednesday the recently-created University Graduate Student Aid Fund, designed to solicit donations for graduate student financial aid.

Raising money for the fund will likely play a role in the next University-wide capital campaign, Summers said. But in the meantime, University officials will use the fund to put more money earmarked for graduate student financial aid in the University’s coffers.

Over the last few months, Harvard’s schools have submitted proposals to the central administration outlining potential use of the funds, though University officials declined to comment on specific allocations yesterday.

Schools will be notified of official award amounts later this month.

Officials and students alike said the financial aid initiative’s timing was right.

Rather than cutting financial aid in the wake of budget woes, Kennedy School Associate Dean Joseph McCarthy said the school will now be able to increase the amount of financial aid available to its students.

“This is particularly helpful given that the school is in a budget crunch,” McCarthy said.

The Graduate School of Education (GSE) will receive roughly $1 million. This is a relatively low number, said the school’s Dean Ellen Condliffe Lagemann, due to a previous $5 million allocation the school received from the central administration during the tenure of former President Neil L. Rudenstine.

She described the announcement as “one of the best things that has happened to the Ed School in a very long time.” In the past, Lagemann said, GSE has lost talented students to universities offering better financial aid packages, such as Brown or Boston University.

But Lagemann said she hopes this will catalyze increased giving for public service professions.

“This is very helpful, but it’s not nearly enough for what we need,” Lagemann said.

Graduate Student Council President Rebecca Spencer said she’s happy to hear that fewer students will have heavy loans hanging over their heads.

“I think it’s great. Any extra financial support that graduate students can get is helpful,” she said.

—Staff writer Catherine E. Shoichet can be reached at shoichet@fas.harvard.edu.