5 ways to pay for graduate school
Key takeaways
- To pay for graduate school, you can look for options you don’t have to repay, like saving early, grants, scholarships, fellowships or employer assistance.
- Reduce your costs by considering affordable grad school options, like online programs, in-state public schools or tuition reciprocity programs.
- If you do need to take out student loans, both federal and private loans can pay for grad school.
Whether you want to increase your earning potential or pursue a new career, graduate school can be worthwhile. The cost of attendance is steep, however, and you may not be able to cover the expenses out of pocket. The good news is you may not have to put your dreams on hold. You can make graduate school more affordable by selecting the right program and pursuing funding options you don’t have to repay, like scholarships and grants. Student loans are an option if you still need funds.
1. Start saving early
If you have some time to figure out how you will pay for grad school, consider opening a 529 plan and starting setting aside cash.
A 529 college savings plan allows students and their families to save for college tax-free. Your contributions to a 529 plan grow tax-free, and you can make tax-free withdrawals if the funds will be used for qualifying educational expenses. Some states offer tax breaks, such as deductions and credits, when you contribute to your 529 plan.
If a 529 plan isn’t an option, it’s worth exploring common alternatives to start saving for graduate school. A brokerage account doesn’t offer tax breaks, but it can help you grow your money faster. Plus, you’re not limited to when you can make penalty-free withdrawals.
You can also tap into the cash value of a permanent or universal life insurance policy by taking out a loan to cover higher education expenses. Remember that a loan against your policy could lower the death benefit. Be sure to consult with your insurance agent to learn more if you want to explore this option.
2. Explore affordable graduate school options
There are a few practical ways to lower the cost of your graduate degree. Consider enrolling in an online program or in-state public university. You can also take advantage of a tuition reciprocity program to save money.
Online programs
Online graduate programs can be more affordable than in-person attendance because there aren’t as many costs to factor in, like commuting.
With many online programs, you’ll be responsible only for tuition costs while still getting a quality education. Make sure the program is fully accredited and from a respected institution before enrolling.
In-state public universities
When possible, seek out universities in your state that offer the degree program you want. Doing so could save you thousands of dollars a semester. Public universities are also generally more affordable than private ones while offering a similar education quality.
Tuition reciprocity programs
Some states have agreements with neighboring states that allow out-of-state students to attend college at in-state rates. For instance, the Western Undergraduate Exchange allows students within 15 participating states to attend college at no more than 150 percent of the school’s in-state rate, saving students an average of $12,500.
3. Look for funds you don’t have to repay
The best funding for graduate school is money you don’t have to pay back. You may have to do more legwork to find scholarships, grants and fellowships, but these opportunities do exist.
Scholarships
Scholarships are free financial aid typically given based on merit or academic performance. Graduate student scholarships often cater to students planning to further their education in a specific field or degree, like pharmacy, business or engineering.
To find scholarships for graduate school, it’s usually easiest to use scholarship search engines.
Grants
Grants also don’t need to be repaid. While scholarships are typically based on merit, heritage and other factors, grants are more likely to require financial need.
Here are a few you can apply for:
- Federal grants: Grants like the TEACH Grant are available through the Free Application for Federal Student Aid. You can view the complete list of federal grants on the application.
- State grants: Most states offer grants based on financial need. You’ll apply for these through the FAFSA.
- Private organization grants: Many private organizations offer substantial grants to graduate students, but they are typically only offered to members of the organization. Contact local or national organizations to see what’s available and whether you’re eligible.
Fellowships
Fellowships typically cover the cost of tuition and offer a stipend in return for work like research studies, peer tutoring and student teaching. Some fellowships even offer housing stipends.
Specific departments within the college or university may offer fellowships. For example, if you’re getting a graduate degree in English, you will complete your fellowship in the English department.
These programs are often competitive. You’ll need to excel academically to qualify.
4. Get aid from an employer
Consider applying for a work-study job or assistantship at the university to help cover the cost of graduate school. Or you can take advantage of tuition assistance and reimbursement programs if offered by your employer.
Work-study and assistantships
Work-study is a part-time job offered through universities to help students pay for school. Work-study programs are usually more flexible than off-campus jobs, and unlike with scholarships and grants, the funds you earn go directly to you.
Work-study is available through the FAFSA. You’ll mark your interest when you fill out the form. If you’re approved, visit the school’s career center website or call to learn more about where to find job postings.
Assistantships are merit-based part-time opportunities that generally come in two forms: a teaching assistant or a research assistant. These roles often include a stipend to cover housing and meal costs, and the school will cover your cost of attendance.
Or you can explore graduate resident assistant jobs. These offer a stipend along with free room and board in exchange for a job working in an on-campus dorm.
Tuition assistance and reimbursement programs
Some employers offer to help you pay for school while you remain employed. They include Amazon, Apple, Best Buy, Bank of America, Chick-fil-A, Chipotle, Comcast, Disney and GAP.
Some employers will help you pay off student loans you already have. Employers can contribute up to $5,250 per year in tuition reimbursement with tax benefits for both the employer and the employee, so if you’re not sure if your employer offers a benefit, it’s worth asking.
Some employers may require that you be with the company for a certain period before you can qualify for tuition reimbursement or assistance. Make sure you understand the eligibility criteria during your job search.
5. Apply for loans
If you cannot cover the entire cost of graduate school out of pocket or with other forms of financial assistance, loans are also an option. Start by considering federal student loans, as they offer benefits you won’t get with private student loans.
Federal student loans
Graduate students can choose between two federal student loans: Direct Unsubsidized Loans and Direct PLUS Loans, also known as grad PLUS loans.
With Direct Unsubsidized Loans, you can borrow up to $20,500 each academic year, with an aggregate limit of $138,500. With grad PLUS loans, you can borrow up to the entire cost of attendance minus any other financial aid you receive.
Within each loan program, interest rates are standardized for everyone who qualifies. But grad PLUS loans charge a higher interest rate and a higher upfront loan fee than Direct Unsubsidized Loans. Grad PLUS loans also require a credit check to ensure there are no major negative items on your credit reports.
You’ll need to fill out the FAFSA to apply for federal graduate school loans. Remember that any money you borrow will have to be repaid, usually over 10 to 25 years.
Private student loans
Private graduate school loans originate from banks, credit unions and online lenders. If you’re going to law school, business school or medical school, there’s likely a lender offering student loans specifically for your degree.
Private student loans have a wide range of interest rates determined by your credit score and financial health. If you have good credit, your interest rates could be lower than what you get through federal loans. Unfortunately, having bad credit means your borrowing costs could be much higher. Interest rates can also be either fixed or variable.
The biggest downside of private student loans is that they don’t come with the benefits of federal student loans, like income-driven repayment or long forbearance periods. So, it’s important to maximize federal aid first.
Bottom line
To ensure your future isn’t shadowed by heavy debt, start planning to cover your graduate school costs as soon as possible. Consider your interests and needs to determine if enrolling as a full-time or part-time student is best. Also, apply for scholarships, grants and fellowships. They’re basically free money that will lower out-of-pocket costs.
Most importantly, decide what you can realistically afford and compute the return on investment of your degree. Doing so can help you decide if the degree is worthwhile. If you decide to move forward, choose a school that best suits your needs and consider all strategies for repaying your graduate school loan.
Frequently asked questions
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