How to Pay for Your Graduate Degree

How to Pay for Your Graduate Degree

More Ways to Pay for Grad School

As more and more students look to continue their educations the big question is how to pay for your graduate degree. Nowadays, a college degree is almost a requirement to get any job in our knowledge economy.  Oftentimes, a graduate degree is needed to really make a difference when trying to land a good-paying job.

Like any other investment, you need to look carefully at the ‘return on investment’ of your money and time in your graduate degree.  Assuming that the sacrifice now and in terms of loan payments over time are worth it, then go for it but have a plan on how to pay for your graduate degree.

While there is financial aid available for graduate school, you’ll need to look harder.  The landscape for funding your graduate degree will be different than what you found when pursuing your undergraduate degree.

Free Money: Grants and Scholarships

Most graduate school programs ending with a professional degree or a master’s offer little in the way of money.  But if you are focused on a degree in an in-demand field you may find ways to cover at least a portion of tuition.

In the 2011-2012 academic year, graduate students received an average of $25,152 in aid which was comprised of $7,400 in grant aid, $16,800 in federal loans and about $900 in tax credits and other tax deductions according to the College Board’s annual Trends in Student Aid 2012.  This doesn’t include the aid in the form of reduced tuition that the school may grant directly.

You may get more.  Start looking for free money.  There are numerous websites that offer search tools.  Contact faculty or the department head in the field of study you are pursuing for help.  You should also look to professionals in the field.  These folks may know about trade or professional associations that offer financial help for those pursuing education in your specific study area.  To locate a specific organization you can try Gale’s Encyclopedia of Associations available through a business or academic library.

There are also many types of grants available from a variety of sources including the government, non-profits and large organizations or companies.

You can try commercial service databases such as You can search for grants based on field of study as well as student demographic or ethnicity.

The National Science Foundation offers either direct or indirect funding for students especially if you can show a focus on educational or research developments such as in the area of curricula development, training or retention.  Other government agencies also offer funding so a search of the websites related to the area of study will show available opportunities through the National Institutes of Health, NASA, US State Department or US Department of Transportation among others.

Borrow Smart

You will very likely need to borrow to finance your education. Before you do you should figure out what your cost of living while a graduate student may be.  Go through and figure out where your cash flow is going and use the time before you enter graduate school to build your cash reserves.  At the very least you should have several months of fixed expenses available in cash to cover your student living expenses. To do this you may need to begin economizing and living like a student so that you can build up your savings.

Once you know your cost of living you can focus on how to pay for graduate school.

Your financial aid options will depend greatly on how you complete the financial aid forms.  Like your undergraduate school, your graduate program will need you to complete a FAFSA financial aid form.  This will help determine your Expected Family Contribution (EFC) and the amount of needs-based aid you may be eligible to draw.

Before you complete the FAFSA form, you should seek professional guidance on how best to position your income and assets so that you can maximize your eligibility.

Once you know your EFC, you’ll know how much you may need in loans to fill the gap above and beyond any scholarships, grants or discounts offered by the school itself.

Step 1 –  Use federal loans first:  These are the most affordable option offering fixed rates and the loans do not accrue interest while still in school.

Step 2 – Apply for a Graduate PLUS Loan:  Since 2006 graduate students including those pursuing a MBA have been able to use the expanded PLUS Loan program which now has a limit of $20,500.

Step 3 – Private Loans to fill the gap:  With the current historically low interest rates, you may find that private loans offer the best value.  Most of these are available with variable interest rates with no caps.

Step 4 – Explore loan consolidation or public service loan forgiveness:  After you graduate you can look at ways to consolidate or refinance loans to lower fixed rates if applicable.  Or if you are focused on a career in the non-profit sector, you may be able to take advantage of newer rules to get some of your loans forgiven in exchange for work in the public or non-profit sectors.

To better understand your options, you should consider working with a qualified financial planner who can go through your options.