How to Pay for Graduate School

Paying for graduate school can be a challenge for many students. Different factors play a role in how much graduate school costs. A master’s degree program can be finished in one to two years in most cases, and the average yearly tuition can cost $30,000 to $40,000, according to Peterson’s.

The type of program, whether you’re in or out of state, and how much of your program you complete online, can all weigh heavily into the calculation of how much graduate school costs.

Individual programs can cost more or less than the averages. For example, the average cost of an MBA is about $80,000 for a two-year program, but to attend a school like Harvard and receive an MBA could cost more than $140,000.

Along with the costs of the tuition itself, there are living expenses to consider when you’re going to graduate school. With that in mind, let’s take a look at how to pay for graduate school.

How to Pay for Graduate School

There are a variety of ways you can pay for college including graduate school. The best option is to begin looking at sources of funding that don’t have to be paid back.

For example, personal savings are a good place to start. It’s also a good idea to look for sources of “free money” that don’t have to be paid back. These can include graduate school fellowships and assistantships, as well as scholarships.

Once you’re sure you’ve explored and exhausted these options that won’t lead to you being in debt, you can then consider loans. There are both federal and private loans available to help people pay for the costs of graduate school.

Federal loans should be where you look first, because they tend to have better interest rates, borrower protections, and repayment options (such as income-driven repayment plans) than private loans.

Jump to a section:

• Grants, Fellowships, and Scholarships
• Working for the University
• Federal Loans
• Private Loans
• Tuition Reimbursement

Grants, Fellowships, and Scholarships

There are also sources of money that don’t have to be paid back, and it’s important for graduate students to explore these financial aid options before looking into graduate school student loans. You can consult with your financial aid office to help you with your grant, fellowship, and scholarship search.

One example of “free money” is a grant. Grants are similar to scholarship programs. The biggest difference between a grant and a scholarship is the fact that grants are often need-based—at least when they’re awarded by the federal government.

Graduate scholarships and grants may be awarded to students from certain backgrounds or who are associated with specific groups. While grants are more likely to be need-based, scholarships are more likely to be merit-based.

Graduate fellowships are another financial aid option to fund an advanced degree. Fellowships are usually merit-based and are often awarded to doctoral students. There are fellowships offered internally by schools, so the student has to study at that specific institution, but there are also external fellowships that offer more flexibility to the student.

Working for the University

Working for the university you’re going to attend is an option to pay for graduate school. Often this type of work comes in the form of teaching or working in a research assistantship program. When students participate in these programs, they may receive a waiver for their tuition, either fully or partially. They may also receive a stipend.

Many grad students who work for the university as a teaching assistant will teach a class of their own, and it can be something like a lab or lecture.

There are also administrative graduate assistantships available, where students can work in a wide array of positions on campus.

Federal Student Loans

There are many federal loan programs available to students planning to go to graduate school. Federal loan programs from the U.S. Department of Education that graduate students might use include the following:

Stafford Loans

Stafford Loans for graduates are fixed-rate Direct Unsubsidized Loans. For graduate school, students can borrow $20,500 per year, and the aggregate limit is $138,500. This aggregate limit does also include any Stafford Loans one has used as an undergraduate.

The current interest rate for Direct Unsubsidized Loans used for graduate or professional school borrowers is 6.6% APR.

There is an origination fee of just over one percent when a student borrows under the Stafford Loan program. Repayment for the Stafford Loan begins six months after someone graduates or is enrolled less than half-time.

Eligibility requires that participants be enrolled at least half-time in a participating school. Only the Direct Unsubsidized version of this loan is available to graduate students, while the Direct Subsidized Loan can also be used to obtain a bachelor’s degree. To receive the Direct Unsubsidized Loan, showing financial need is not necessary.

>> Read More: Difference Between Subsidized and Unsubsidized Student Loans

To apply for this loan or any federal financial aid, students should complete the Free Application for Federal Student Aid (FAFSA).

Graduate PLUS Loans

Graduate PLUS Loans are available as a way to pay for graduate school for eligible borrowers. There is a fixed 7.6% interest rate, and the loan limits are flexible, but credit history is relevant to eligibility.

To be eligible, you do have to file the FAFSA and pass a credit check, but you don’t have to show financial need.

With this loan, you may be eligible to borrow up to the full yearly cost of attendance, minus other aid you might receive such as scholarships and federal student loans. There isn’t an aggregate loan limit with Graduate PLUS Loans.

There are multiple repayment plans, a cosigner isn’t required, and you can defer payments while you’re still in school.

Private Student Loans for Graduate School

Private student loans are also an option for students who are going to graduate or professional school. However, they shouldn’t be the first option.

First, if you’re planning to attend graduate school, you should complete the FAFSA and see what’s available to you in terms of not only federal loans but also grant and work-study options. You should also make sure you max out what’s available in federal student loans before considering private graduate student loans, and you will either need good credit or a willing cosigner.

You can see our top picks for graduate student loans here or check out our other recommendations for specific types of schools:

• Law School Loans
• Bar Study Loans
• PhD Student Loans
• Medical School Loans
• Dental School Loans
• MBA Student Loans

Tuition Reimbursement

Tuition reimbursement is something that’s a bit different than the methods of paying for graduate school listed above. In this situation, a graduate student may already be working for a company, and that company will pay for them to participate in a graduate program as a benefit for their employees.

The benefit for the company is that when you complete your graduate program, they’re going to have a more skilled worker, and this strategy helps with retention as well. Some companies may pay for all of the cost of certain employees to receive a graduate degree, while other companies may pay for a portion of an employees’ graduate studies.

Some of the large companies that offer these types of programs include:

• ​Procter & Gamble’s tuition assistance benefit will reimburse employees up to 80 percent of their tuition and fees (capped at $40,000) for studies that support their current or potential next position
• Boeing often invests in their employees in the form of annual tuition assistance, and they don’t require that the course of study be related to the employee’s current job at the company

Is Graduate School a Worthwhile Investment?

If you are considering graduate school, you probably already know the costs are significant. The cost of graduate and professional programs is often more than even an undergraduate degree. So, how do you decide whether or not it’s a worthwhile investment?

In some instances, graduate school can greatly impact one’s career prospects and earning potential over a lifetime. And pursuing this level of higher education might even be necessary if you plan to eventually earn a Ph.D. However, for some people, it may have little to no effect on their earnings or career advancement options, and they’re still left with huge amounts of student loan debt.

A few considerations that can help if you’re weighing whether or not grad school is a good investment include:

• What are the starting salaries for the program you’re considering?
• Once people go into the field you’re considering studying in, what do they actually end up earning?
• How easy will it be for you to find a job after you complete a graduate or professional program? Even if the earning potential is high with a certain program, if the demand isn’t there, then grad school might not be worth it. What might the demand look like in the future?

Weigh the costs of graduate school and compare that to your earning potential and you’ll be able to calculate a pretty specific ROI. Also, remember to first explore any and all options for paying for graduate school that don’t have to be paid back before you move on to funding from private and federal loans.