Credible takeaways
- Before taking out student loans, explore options like scholarships, grants, fellowships, and assistantships.
- Consider federal and private student loans only if you need additional help funding your graduate studies.
- You may be eligible for a tuition reimbursement from your employer or the Lifetime Learning tax credit.
Going to graduate school can help you secure a better paying job in the future, but attendance isn’t cheap. Grad students leave school with $107,200 in average student loan debt according to the National Center for Education Statistics. Luckily, there are ways to lower your education costs.
Here’s how to pay for grad school without ending up with six figures of student loan debt:
1. Apply for gift aid
When paying for grad school, it’s a good idea to start with gift aid which is money you don’t have to pay back later. This includes scholarships and grants.
- Grants: Grants are usually awarded based on your financial need rather than your academic merit. Schools, professional associations, and private organizations often offer grants directly to grad students. You can search for federal grant opportunities on Grants.gov.
- Scholarships: Scholarships are often offered for academic merit, athletic achievement, demographics, or unique skills. Your school might offer you a scholarship, too, but you can also find and apply for awards on your own. Resources like Scholarships.com and GoGrad can help you find scholarships to apply for.
2. Research fellowship or assistantship opportunities
Some graduate students are offered a fellowship, another type of financial support. With a fellowship, you’re expected to teach or perform research in return for a stipend. You might also get partial or full coverage of tuition. Fellowships are usually awarded based on academic merit.
If you’re willing to step in as a teaching assistant or help professors with their research, you might also qualify for an assistantship. An assistantship is a type of paid academic employment for graduate students. You’ll get a stipend to cover the cost of tuition in return for your work.
3. Ask your employer for help
If you’re currently employed, ask your employer’s human resources department if there’s a tuition reimbursement program for graduate degrees. Many companies will pay for some or all of your program.
Some employers require you to make a service commitment to the company to qualify for their program. If you leave before the commitment term ends, you might have to repay all of the tuition your employer paid for — so make sure you know the rules before signing an agreement.
4. Participate in a work-study program
A commonly overlooked way to pay for grad school is using the federal work-study program, which is available to both professional and graduate degree students. If you qualify for work-study, you’ll get a part-time job to help pay for your education and living expenses.
The job will likely relate to your field of study. You’ll typically work for your school, a local nonprofit organization, or a public agency. Plus, you’ll earn at least minimum wage (though some fields pay a lot more). This can be a great way to pay for school while gaining experience and bolstering your resume.
To be eligible for work-study, you must complete the Free Application for Federal Student Aid (FAFSA) and have documented financial need.
5. Claim tax credits
As a graduate student, you can take advantage of valuable tax credits on your tax return — like the Lifetime Learning Credit (LLC). With the LLC, you can claim up to $2,000 that you spent on eligible education expenses. Plus, there’s no limit on how many years you can claim the credit.
The amount of the LLC is gradually reduced if your modified adjusted gross income (MAGI) is between $80,000 and $90,000 ($160,000 and $180,000 if you’re married and file a joint return). If your MAGI is higher than $90,000 (or $180,000 if married and filing a joint return), you can’t claim the LLC.
6. Apply for federal student loans
If you have to borrow money, federal student loans are a good place to start. There are two federal options for graduate student loans:
Related: How Does the FAFSA Work?
7. Consider private student loans
In some cases, you might need to take out private student loans. Here are a couple of situations where this could apply:
- You’ve exhausted your federal student loan options.
- You qualify for a lower interest rate through a private lender.
Federal student loans have fixed interest rates regardless of your credit history, but private loans work differently. Loan terms and rates vary from lender to lender. If you have good credit and a steady income, you might qualify for a lower rate, helping you save money over the life of the loan.
If you decide to take out a private student loan to pay for grad school, make sure you consider multiple lenders to make sure you find the right loan for you. There are also private student loans specifically designed for certain degrees (like law school or medical school) that might be a good fit, too.
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How to pay for grad school
A graduate degree can be a great investment in your future. But when it comes to paying for grad school, it’s important to be careful about how much debt you take on. Think about your degree’s return on investment and how much more you can expect to earn after you graduate before you take on any debt, and make sure you have a plan in place to repay it.
Paying for grad school FAQ
Does FAFSA cover graduate school?
The FAFSA can be used to obtain federal loans for graduate school such as Direct Unsubsidized Loans or graduate PLUS loans. Grad students can borrow up to $25,000 in unsubsidized loans, and up to the school’s total cost of attendance with a graduate PLUS loan.
How much money do you need to save for grad school?
The cost of attending graduate school varies based on the school and your program of study. During the 2018-2019 academic year, the average tuition for graduate programs was $12,171 at public institutions. For-profit private institutions charged an average of $14,208, while tuition at nonprofit private institutions was significantly higher, averaging $27,776.
Is grad school worth it financially?
Graduate school can be worth the cost depending on the specific program and career it can lead to. For some students, graduate school could lead to higher earning potential and career advancements. Before making the investment, it’s important to consider things like tuition costs, potential student loan debt, and overall time commitment.
