How to pay for grad school

Here are some factors to consider before applying to graduate school. (iStock)

Attending graduate school is a big decision, especially since it can involve borrowing a large amount of money in student loans and quitting a full-time job to receive a degree.

There are several things to take into consideration before making this choice. Some of the potential benefits include advancement in your career, attaining a managerial position and an increase in your annual salary. Here is what you need to know before you decide to enroll in a graduate program.

How to pay for grad school

First, examine the financial impact of attending graduate school for two or more years. Consider how you'll pay for tuition and other living expenses, types of graduate student loans and how much you will need to borrow.

Some employers offer tuition reimbursement programs, which is another advantage to working prior to applying to an advanced degree program, said Robert Johnson, a finance professor at the Heider College of Business at Creighton University in Omaha, Nebraska.

You can determine your costs ahead of time by using an ​online student loan calculator. You can also visit ​Credible to view a rates table​ to compare fixed and variable interest rates. However, note that Credible directs you to private student loan lenders — not federal, which may offer more benefits and protections if you can qualify for them.


Obtaining a federal student loan means you will have several different repayment options, "many of which are designed to make your monthly payment affordable for you," Leslie Tayne, a Melville, N.Y. attorney specializing in debt relief, said.

The standard repayment plan offers fixed payments to ensure that your loans are paid off within 10 years. Other federal student loan options include graduated or extended repayment, Revised Pay As You Earn (RPAYE) or Pay As You Earn (PAYE), income-contingent and income-sensitive.

"If you notice that you can’t keep up with the repayment plan that you have or you suspect that another plan would be better for you, you are allowed to change your repayment plan at any time for free," she said.

Private student loans are also available from various private lenders. These loans require a good credit score and possibly a co-signer.

Visit ​Credible to learn more about private student loans​ and get personalized rates from multiple lenders without affecting your credit score.

Your student loans could end up fully federal, fully private or even a combination of the two, she said.

Visit ​Credible to review private student loan options after you’ve hit federal loan limits​.

Applying to graduate school requires you to conduct some research beforehand to ensure that an advanced degree is helpful for your career and that taking on additional debt such as student loans is affordable and worthwhile.

What to do before applying

Before applying to grad school, research various academic institutions, what classes are available and whether or not your profession warrants getting an advanced degree.

Applying to graduate school is a big decision for people professionally and financially, said Tayne. Consider your current financial situation beforehand and the financial impact of receiving another degree, she said.

"This includes identifying how you can accommodate and meet the demands of the cost of tuition among other costs for the program during the time you’ll be in the program," Tayne said.

One important factor to consider is if you will keep working, the cost of tuition, living expenses and whether you are eligible for any scholarships or tuition assistance, she said.

Use an online tool like ​Credible to compare student loan variable interest rates and fixed interest rates without affecting their credit score​.


Pursuing a graduate degree can be a costly prospect for people who are faced with "financing the bulk of their studies through student loans," said Bruce McClary, spokesperson for the National Foundation for Credit Counseling, a Washington, D.C.-based non-profit organization.

"Any college education has an opportunity cost and should be considered as an investment in future earnings," he said. "A little research on employability, the job market and potential starting salary in a chosen field can help people make a more informed decision about financing their graduate degree."

The timing of when the degree is pursued varies in each profession – employers prefer that individuals with MBAs also have work experience, said Johnson.

"Students with work experience have a richer experience in an advanced degree program," he said. "They tend to learn more, but they also provide other students with a real-world perspective."

How to apply to grad school

The process of applying to grad school varies, but many universities require that students take the Graduate Record Exam (GRE), a standardized test that is part of the application process. Based on how high a person scores, you can be accepted into elite programs or be eligible for a scholarship, Tayne said.

Research and consider the cost of tuition and scholarship opportunities.

"Colleges often offer several programs for students who are financially restricted as well as scholarships for outstanding scholarly marks and experiences," she said.