Graduate school can be an incredibly rewarding experience, opening doors to new opportunities and advancing your career. However, it also often comes with a hefty price tag that can leave graduates saddled with overwhelming student loan debt.
Navigating the options for financing graduate school and choosing the best student loans does not need to be a struggle. With proper planning, research and strategic borrowing, you can fund your graduate degree while minimizing debt. This comprehensive guide breaks down the best approach to pay for graduate school in a strategic order, starting with "free" money and progressing to federal and then private student loans.
The first step for any graduate student should always be applying for every possible grant and scholarship, both general and those specific to your field of study. Take the time to thoroughly research all options—you'd be surprised at how many scholarships go unused simply because students don't take the time to apply.
Start with your college or university's financial aid office to inquire about institutional grants and scholarships for graduate students. Many academic departments also offer grants and scholarships specifically for students in their programs.
Expand your search to external scholarships offered by organizations and foundations related to your field of study. Professional associations often offer scholarships to graduate students as well. Don't forget about general graduate scholarships based on criteria like academic merit, leadership experience, community service involvement, and financial need.
National scholarships like the Fulbright Grant and the National Science Foundation Graduate Research Fellowship are very competitive but worth applying to. Teaching and research assistantships also provide tuition remission and a stipend in exchange for working in your department.
Explore Graduate Fellowships and Assistantships
In addition to scholarships and grants, graduate students should consider applying for fellowships and assistantships offered through their academic department or graduate program. These opportunities provide both financial assistance and valuable professional experience.
Graduate fellowships essentially provide full funding for your graduate study, covering tuition and providing a stipend for living expenses. Fellowships recognize academic excellence and promise in research or teaching. They allow you to focus on your graduate work full-time without the need for other employment.
Assistantships also offer paid work opportunities, such as working as a teaching assistant or research assistant for faculty in your department. Assistantship positions provide a tuition waiver or remission, plus a salary or stipend.
Working as a TA or RA allows you to offset the costs of graduate school while gaining hands-on experience in teaching or research—essential skills for future academic careers. Explore all fellowships and assistantships available through your school.
Leverage Federal Direct Unsubsidized Loans
After maximizing all possible grant, scholarship, fellowship and assistantship opportunities, federal direct unsubsidized loans should be your first choice to borrow. The unsubsidized Direct Loan program offers eligible graduate students up to $20,500 per year, with a cumulative borrowing limit of $138,500.
Interest accrues on unsubsidized loans while you are enrolled, but principal and interest payments are deferred until after graduation. For 2022-2023, the interest rate on unsubsidized Direct Loans for graduate students is 6.54%. In contrast to undergraduate loans, financial need is not a requirement for graduate students to receive unsubsidized Direct loans.
One major benefit of Direct unsubsidized loans is that they are eligible for income-driven repayment (IDR) plans as well as Public Service Loan Forgiveness (PSLF) after graduation. You'll need to complete the FAFSA to determine your federal loan eligibility.
Graduate PLUS Loans For Additional Funding
If you reach the annual or aggregate limits on Direct Loans and still need funding, Graduate PLUS loans allow graduate students to borrow up to the full cost of attendance minus other financial aid received. Eligibility for Graduate PLUS loans depends on not having an adverse credit history—there is no minimum credit score cut-off.
For 2022-2023, the interest rate on Graduate PLUS loans is 7.54% and can be used to cover additional tuition, fees, room and board, books, supplies, transportation and other expenses. While not ideal, Graduate PLUS loans may be necessary to bridge the gap between other aid and the costs of graduate school.
Private Student Loans As a Final Option
After exhausting all possible federal aid, some graduate students consider private student loans to cover remaining costs. Private lenders like banks and online lenders offer graduate student loans with variable rates and loan terms. The interest rates and associated fees charged on private student loans can be markedly different depending on the individual lender.
Private loans lack some protections and benefits of federal loans, like income-driven repayment and forgiveness options. However, they often offer lower interest rates and excellent borrower incentives and discounts for strong credit. Thoroughly compare total costs and benefits before committing.
The takeaway is prioritizing free aid first, then federal direct and PLUS loans, before resorting to private loans. Analyze the return on investment and only borrow what is absolutely essential. Follow this strategic order to pay for graduate school smartly and limit student loan debt.
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