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how to pay for graduate school

4 Ways to Pay for Graduate School

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The decision to apply for graduate school is a big one — professionally, personally, and financially.

The money you use to pay for graduate school is likely to come from a variety of sources including student loans, scholarships and grants, work-study, your own savings, and gifts from people who support your goals. Read on for a closer look at some of the ways you can pay for graduate school.

Paying for Grad School With Your Personal Savings

Generally, grad students fund part of their continuing education with a chunk of personal savings. You might have spent a few years since finishing undergrad in the workforce, and built up a grad school fund in your savings account. Or maybe you didn’t have to spend as much on undergrad, and you still have some funds earmarked for your education.

Opening a 529 Plan

If you are just starting to think about saving for grad school, you might also want to look into opening a 529 plan. When you contribute to a 529 plan, any earnings deposited are tax-deferred. If you withdraw funds for qualified educational expenses, it doesn’t count towards your income. You might have had an account for your undergrad education, you can also use any leftover funds in there towards a graduate degree.

If you are still employed and are considering grad school part-time or later in the future, check to see if your employer offers to match your 529 contributions. This is a great perk if you have grad school in mind, but make sure to confirm the limit on your match, and if there are any other requirements.

Apply for Graduate School Scholarships, Grants, Fellowships, and Assistantships

Many graduate programs also have specialty loans, scholarships, grants and fellowships available specifically for that school or degree type.

Search for Graduate Scholarships and Grants

Many graduate programs also have specialty loans, scholarships, grants and fellowships available specifically for that school or degree type. Much like a scholarship, grants are a great way to finance an education because you will not need to repay the money you receive.

To get started looking at scholarships, grants and more for your graduate studies you might want to research through these databases:

  • Fastweb – A scholarship match site for both grad and undergrad students, once you create a profile the site will show you more scholarships than you knew existed.   
  • The College Board – A stalwart of the continuing education space, the College Board’s website also contains a comprehensive list of grants and scholarships for grad school.
  • Scholly – For high school, undergrad, and grad students looking for scholarships, after creating an account Scholly aims to match students with scholarships that fit them. 
  • Peterson’s Scholarship Search – Peterson’s allows you to search through a long list of grad specific scholarships without making an account first. 

Research Graduate Fellowships

A fellowship is a short-term opportunity to work on a research team or study in your specific field. Fellowships are awarded generally based on academic standing, but not always. These experiences can be a great resume building tool, as well as an income source while in grad school.

The types of fellowships available: 

  • Institutional Fellowships – These are fellowships offered by the school you plan to attend or are attending, and are only for students. 
  • Federally Funded Portable Fellowships – Fellowships that are funded by federal agencies if you’re attending a graduate program in an area that directly benefits an agency. These are not tied to a specific school and instead follows the student.  
  • Portable Fellowships from Independent Organizations – Fellowships not funded by a federal agency and do not require you to go to a specific school.  

Apply to Graduate Assistantships

Assistantships are similar to a work-study program, where graduate students are given financial support for teaching and/or research at the institution where they are studying. These are generally specific to the institution the student attends, graduate students should reach out to their financial aid office to learn more about the programs offered at their school.

Apply for Federal Student Loans

Often scholarships and savings are not enough to cover the cost of graduate school, and students will take out a loan to cover the missing piece. Make sure you have exhausted all scholarships, grants, assistantships, and other income streams before turning to a federal loan.

Just like undergrad, grad students seeking a federal student loan will need to fill out the Free Application for Federal Student Aid, better known as FAFSA. You will need to file a new form every year you are in your graduate program, to note any changes in your financial situation.

No matter your degree, you will likely be eligible to borrow with federal loans including unsubsidized Stafford Loans and Graduate PLUS Loans. A benefit that comes with federal loans is the ability to use one of the government’s income-based repayment programs. However, IBR programs do have drawbacks including a potentially big tax bill at the end of the repayment period.

Rates on federal loans are set by the government and are adjusted each year. Every borrower receives the same rate no matter their credit profile and these loans do not ever require a cosigner.

Types of Federal Loans Available to Graduate Students

There are a couple of different loan types available to graduate students based on information included in your FAFSA:

  • Direct Unsubsidized Loans – You do not need to demonstrate financial need to apply for a Direct Unsubsidized Loan. Your school will determine how much you can borrow based on the cost of attendance, factoring in any other financial aid you receive. Grad students will need to be enrolled at least part-time to receive a loan, and there is a limit to how much you can borrow over the course of your education.
  • Direct PLUS Loan – Direct PLUS Loans are is based on the information provided in your FAFSA and each school will decide on the amount of the loan based on other financial aid provided. While enrolled in school at least part-time students will not need to make interest payments on the loan and have a six month grace period after finishing or leaving school. If you have adverse credit you might need a cosigner to sign the loan as well.

Borrow Private Loans For Grad School

If you have maxed out your federal financial aid and need additional student loans to cover your costs, you might consider private loans. For graduate students who know they have high-earning prospects and have an excellent credit profile, a private loan could offer more competitive rates as compared to federal loans.

Unlike federal loans, rates vary and may be fixed or variable with a private company; the rates offered are determined by your credit profile. Most private student loan lenders use LIBOR as their benchmark rate for variable rates. Using a co-signer to apply for a private loan may also improve rates offered.

How to Choose a Private Student Loan Lender

So schools might provide a private lender list, but here are important factors to keep in mind when comparing private lenders:

  • The interest rate you receive
  • If the interest rate is variable or fixed
  • Origination fees for taking out the loan
  • Any fees that come with carrying the loan
  • Terms in the fine print

Earning a Specialized Graduate Degree?

Many specialized grad programs have financing options specific to that field of study, that are not an option to other grad students. Readers should check out Earnest’s specific articles on these specialized degrees for more information on each:

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Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.