Paying for graduate school

If you study the different ways to pay for grad school, you can probably swing it. Graduate school can be a huge step. It’s likely to mean a dramatic change in your lifestyle, both personally and financially. And while getting a postgraduate degree often means you’ll make more money down the road, you’ll still need to finance your education while you’re in school.

If you depended on financial aid to pay for college, you’ll be familiar with some of the procedures. But you’ll find some new things to deal with as well.

Do the FAFSA first

Regardless of your financial situation, your first step should be to fill out the Free Application for Federal Student Aid (FAFSA) . It determines your eligibility for federal Stafford Loans, as well as many grants, scholarships, and other non-federal aid. Filling out the FAFSA can be time-consuming, and you’re asked for all sorts of personal financial information, so be sure to leave yourself enough time. The federal filing deadline is June 30 of the year for which you’ll need funding, but the sooner you get your application in after filing opens on October 1 of the previous fall, the better chance you’ll have of getting federal money. Most graduate programs require that you submit your FAFSA in early spring for their institutional financial aid programs. You can complete the application online at www.fafsa.ed.gov.

If you encountered the FAFSA when you applied for undergraduate aid, you’ll find this a welcome change: You aren’t required to report your parents’ income or assets. So you won’t lose the chance to get federal money because of your family’s financial situation.

Federal aids

Stafford Loans are the most common form of federal aid — in fact, most graduate students are eligible to receive them. The government sets annual loan caps for graduate students that are higher than the caps for undergraduates, plus an aggregate cap of $138,500 that includes both graduate and undergraduate loans.

There are two kinds of Stafford Loans. Subsidized loans require that you demonstrate financial need. If you’re in school at least half time, the government pays the interest on them. You can take unsubsidized loans regardless of your financial situation, but you’ll be responsible for all of the interest that accumulates.

Based on your income, you may also be eligible to take a Lifetime Learning Credit when you file your federal income tax return, reducing the amount you owe.

Earn while you learn

Assistantships are another way to finance graduate education. The opportunities they provide for research or teaching can enrich your resume as well as your bank account.

Assistantships are almost always competitive positions, and they can often cover a substantial part of your tuition and living expenses — in recent years, full-time students with assistantships have earned an average of $15,000 to $30,000 a year. And that’s money you’re earning, not borrowing, so there’s no payback or interest later on. (You do owe federal income tax on fellowship income, but not on scholarship aid.)

But make no mistake about it — you’ll be working to earn that money. Many assistants work 20 hours a week or more, especially those in teaching positions. That kind of time commitment can be difficult when you’re already busy with your own work, and it can make what you’re getting paid seem a lot smaller.

In recent years teaching assistants at some schools have unionized to petition for better working conditions. If you’re considering applying for this combination of work and aid, make sure the schools and departments you’re looking at treat their assistants fairly.

Some strings attached

Your employer may agree to pay for part or all of your education. But this free schooling isn’t exactly free. Typically, you’ve got to agree to go back to your job for at least a few years after you get your degree.

If you’ve been happy at the company, and you want to stay in the same line of work, this can be a great deal. But be sure it’s really what you’re looking for. You don’t want to get locked into a job or career path that looks a lot less exciting at the end of grad school than it did at the beginning. And pulling out of an agreement with your employer can result in penalties and fees, as well as education costs you weren’t expecting.

If you want to take advantage of an employer’s offer without committing to something you’re unsure of, see if you can work out an agreement that lets you go to school part-time and still work. That way you can keep your hands in both worlds without making a future commitment you may later regret.

Who gets what?

Students in different graduate programs often finance their educations in different ways. While students in PhD programs can often get assistantships and grants as well as loans, medical and law students usually can’t work while in school and depend more heavily on loans.

But it always pays to ask what’s available. A state university might offer you a reduction to in-state tuition rates even if your home is elsewhere. Or a private university may have discretionary funds it can make available to select students.

If more than one school seems interested in you, you may be able to negotiate more help from the one you prefer by mentioning what another school is offering you.

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This information is provided with the understanding that the authors and publishers are not engaged in rendering financial, accounting or legal advice, and they assume no legal responsibility for the completeness or accuracy of the contents. Some charts and graphs have been edited for illustrative purposes. The text is based on information available at time of publication. Readers should consult a financial professional about their own situation before acting on any information.