How to Pay for Grad School

Start Saving For Grad School as Soon as Possible

On average, 24% of graduate school costs are paid by students' savings or earnings, according to data from student loan provider Sallie Mae. The earlier you begin to save money for graduate school, the better prepared you'll be to foot the bill. As soon as you've made the decision to go to graduate school, start thinking about how you can budget for the costs.

Examining your current income and expenses will help you identify places where you can cut back on your spending to sock away money for graduate school. Making a budget can help you stay on track to reach your savings goals—plus, it's an essential life skill you'll use long after you earn your degree.

Formulate a Plan and Know How Much You'll Pay

The cost of graduate school can vary widely depending on the type of program you choose, whether you plan to attend a public or private school, and whether the school is in your home state. For 2019-20, The College Board reports, average tuition and fees for a master's degree at a public four-year college was $8,990; at a private four-year college, it was $31,140.

Choosing your graduate program wisely can help you keep costs down while still providing a solid education. As you look at schools and programs, it's a good idea to run through your own cost-benefit analysis and ask yourself the following questions:

• How may a graduate degree affect your future earnings in the field you plan to enter?
• Will the job you want be in demand once you're done with your degree?
• How well does a particular school prepare its graduates to find jobs?
• What is the value of a school's reputation or the connections you can make there?
• What do recent graduates have to say about the value of their degree?

Remember to include the estimated cost of rent, transportation, food, textbooks and other expenses when comparing the costs of various graduate programs. Each school should provide an estimated cost of attending that takes these expenses into account.

See if You Qualify for Federal Student Loans

According to recent data from Sallie Mae, 77% of graduate students paid for school, at least in part, by borrowing. If you expect you'll need help covering the costs of your education, start by seeing if you qualify for federal student loans. Unlike private student loans, federal loans have uniform interest rates, terms and conditions. They also have more flexible payment options, such as the potential for loan forgiveness or the ability to defer payments in case of financial hardship.

To be considered for federal student loans, you'll need to complete and submit the Free Application for Federal Student Aid (FAFSA). You must also meet certain criteria, including being a U.S. citizen or eligible non-citizen, having a Social Security number and being enrolled at least half-time in an eligible degree program. Federal student loans for graduate students include:

• Federal direct unsubsidized loans: Interest on unsubsidized loans accrues while you are attending school, but you don't have to begin to repay your loans until after you leave school. You can choose to repay the interest during school, but if you don't, it is added to your principal when you graduate and begin repaying the loan. You can borrow up to $20,500 annually.
• Federal direct graduate PLUS loans: If you need to borrow more than the maximum available through a federal direct unsubsidized loan, you can apply for a PLUS loan. Unlike federal direct unsubsidized loans, these require a credit check. However, the credit check doesn't consider your credit score; it simply looks for any adverse credit history. You can borrow up to the cost of attendance (as determined by the school) minus any other financial aid you're receiving.
• School-funded aid: Many schools offer assistance with graduate school costs. Check with the schools and degree programs you're considering to see what types of student loans or financial aid are available.
• State aid: Your state may have graduate student aid or loan programs. Visit the U.S. Department of Education website for links to resources for your state.

Look Into Private Student Loans

Private student loans, available through banks and credit unions, are another way to pay for graduate school. Unlike federal student loans, private student loans take your creditworthiness into account, so the higher your credit score, the better chance you have of getting approved at a lower interest rate. If you're considering getting a private student loan, be sure to check your credit report and credit score to get an idea of the types of loan terms you may qualify for.

While federal student loans follow standardized guidelines, every private lender sets its own rules and terms. Repayment terms, loan limits and interest rates will vary depending on your lender. The interest rates you'll pay on your loans may be fixed or variable, and some lenders may even grant you a lower interest rate than you'd get from the government. Private student loans, however, aren't eligible for forgiveness or income-driven repayment plans available for federal student loans, so be sure you fully understand the costs involved in a private student loan before you agree to borrow.

Research Fellowships, Assistantships and Scholarships

Borrowing money isn't the only way to pay for graduate school. Many private and public universities offer research and teaching assistantships for graduate students. You'll assist a professor by teaching classes or conducting research in exchange for tuition reimbursement and an annual living stipend. In addition to helping you finance your degree, these part-time positions can also provide valuable experience in your chosen field.

There are even ways to secure money you don't have to work for or pay back that will help you pay for school. Think that sounds too good to be true? Many of the schools on your list likely offer grants, fellowships or scholarships. As you might expect, fellowships, scholarships and grants are highly competitive, so start your research and application process early. If you've found the assistance opportunities offered through your school lacking, do some research online and apply for additional graduate school fellowships and scholarships from other organizations.

Consider a Part-Time Job

Depending on your financial needs and how much time you have available, you may want to consider getting a part-time job during grad school. The income could either help pay for your graduate school costs directly or cover the interest on your federal direct unsubsidized loan during school, so you don't have to pay deferred interest after you graduate.

Paying for graduate school may seem overwhelming at first, but in reality, there are many resources that can help you cover the costs. Plan ahead, start saving early and research all your options, and you'll discover it's easier than you think to finance your graduate degree.