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Best Practices in Paying for Graduate School
As with any investment, it’s wise to think long-term. This includes an assessment of what you’ll put in vs. how it will pay off with what matters to you (a salary increase, personal enrichment, or greater professional opportunities).
Loans, fellowships, research grants, teaching assistant positions, and scholarships are all viable funding sources. And just like in undergrad, you’ll find there are many options for financing graduate school at your disposal.
Where to Start
Your Financial Aid Office
Professionals in student aid offices know grad school financing options in and out. They can also provide school-specific information on the percentage of their graduate students who receive funding and the average cumulative debt their graduates hold.
Students and Teachers
Those who teach within your program and the students who attend their classes might offer further insights on how and where to find graduate school funding. They’ll also have a unique perspective on how to make the most of your time and investment.
How to Pay for Your Master’s Degree
Some companies offer tuition assistance programs for employees pursuing a master’s or doctorate degree. This assistance might come in the form of reimbursement, contingent upon degree completion or it could be grade-sensitive.
Employers who offer this type of assistance do so because it is an investment in existing resources. For this reason, you might be asked to stay at your company for a predetermined number of years in exchange for tuition reimbursement.
Fellowships & Scholarships
Fellowships and scholarships do not need to be repaid; it’s gift money that can be applied to school-related expenses like tuition, supplies, fees, and sometimes housing.
Fellowships are often connected to a specific academic project or research initiative. The parameters of a fellowship might require assistant teaching or an internship within your academic focus.
Scholarships for grad school can be merit or need-based, so the application process might entail demonstrating academic achievement or aptitude in addition to providing information about your financial circumstances. Scholarships also come in a wide variety of amounts, so students can combine multiple scholarships to help pay for graduate school.
Work for the School
If you’re an employee at an educational institution, a graduate degree is usually offered at a generous discount. Be sure to check the job boards online or your school’s websites for employment opportunities at your targets.
Work-study is also a way to help pay for graduate school and won’t take you too far from your academic environment.
If you’re currently working full-time and you know you’ll need to pay for graduate school, putting money aside is a solid idea.
Some states offer tax relief on this type of savings account, known as “529 plans.” The benefits of a 529 plan vary from state to state, but it is essentially an investment account that offers tax-free earnings growth and tax-free withdrawals when the funds are used to pay for qualified education costs.
For those wondering, “How do people afford to live during grad school?”. A great way to cut costs during that time as a student and work on savings is through finding student housing available for grad school students. Living closer to campus can help save on gas and commutes.
If you can, set money aside now to prevent the need to take out a loan, which costs more in the long run through interest and fees.
Graduate Student Loan Options
After exhausting other financial aid options, students may choose graduate student loans to fund the remaining cost of an advanced degree.
Federal Student Loans
Federal student loans are issued by the government and usually offer low, fixed interest rates and favorable repayment terms. Graduate students are eligible for a few different types:
Federal Direct Loans
Federal Direct Loans (or “Stafford Loans”) are unsubsidized student loans – meaning they accrue interest while you’re in school and you will have to pay the loan back, plus interest, in full.
Federal Perkins Loans are federal student loans for graduate students who demonstrate exceptional financial need. These loans offer a fixed interest rate that’s typically lower than the Stafford Loan rate. A credit and income history is required to qualify.
Direct Graduate PLUS Loans
Grad PLUS loans are issued by the government to cover costs that a regular Stafford/Direct Loan does not.
A Direct Graduate PLUS Loan will probably have a higher interest rate than a Federal Direct Loan, so it’s a good idea to compare interest rates on student loans while researching federal loan options and other ways to pay for graduate school.
School funding is a blend of federal, state, and local dollars. These funds are typically distributed to state-run schools and state-sponsored academic programs. To learn more about what’s available in your state, contact your state’s Department of Education:
Private Graduate Student Loans
Private student loans for graduate school are made and funded by private lenders like banks, credit unions, and financial institutions. To determine your ability to repay the loan, lenders often require a credit and income review.
To secure a lower interest rate, you might want to consider applying for your student loan with a cosigner – especially if your credit and income history is limited.
Private Student Loans vs. Federal Student Loans
Some types of federal student loans require demonstrated financial need, but they offer fixed interest rates for the life of the loan and repayment assistance options not offered by most private lenders.
Both Grad PLUS and private student loans offer assistance up to your cost of attendance each year, but you should compare both options to find what works for you and your budget.
Find the Best Ways to Pay for Graduate School
It’s never too early to start a graduate school financing plan – even if you’re not quite ready to start a degree program. Once you’ve done your initial research, don’t hesitate to take the next steps:
- Apply Early. In many cases, funding sources have a limited amount to award. Since graduate programs can be competitive, you’ll want to get in early and make your best case. Whether it’s completing the Free Application for Federal Student Aid (FAFSA) or filling out applications for grants and scholarships, be mindful of deadlines and leave plenty of time to gather letters of recommendation, personal essays, and research proposals.
- Assess Benefits. Perform a cost-benefit analysis (CBA) to determine how your expenditures will measure up to your potential earnings increase. This means crunching the numbers on everything from tuition, supplies, and rent, to transportation, health insurance, and loan interest payments. When you tally up your full financial responsibility, it gives a much clearer picture of how much money you will need vs. your expected gains.
- Compare and Negotiate. If the assistance package offered by your school isn’t enough to cover costs or doesn’t have terms as favorable as you’d like, you might be able to negotiate with your student aid office – particularly if you have a competing offer from another school. This could be dependent upon your school’s acceptance rate and the competitiveness of your degree program, but it is always a good idea to ask!
Going off to graduate school?
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