How to Pay for Grad School

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Contributor, Benzinga
May 2, 2019

During the 2017–2018 academic year, American educational institutions awarded 775,000 master’s degrees and 181,000 doctoral degrees, according to the National Center for Education Statistics (NCES). By the 2027-28 academic year, the Center expects those numbers to rise to 814,000 and 191,000, respectively. 

The cost of a graduate degree depends on whether you plan to study at a public or a private institution. Some studies indicate that a 4-year program with tuition, fees, room and board at a private nonprofit institution could set you back $48,510 for the 2018-19 academic year, compared to $21,370 at a public institution. 

A study by the NCES estimates that 60% of master’s degree earners and 75% of those who completed doctoral studies finished their course of study with outstanding student loans.

Doctorate-level studies could leave students with even greater levels of debt — anywhere between $98,800 and $246,000 — depending on the field of study. 

If you plan to pursue graduate studies, here’s a step-by-step guide to help you pay for it.

Step 1: Plan for Grad School Early

If you’re in an undergraduate program and plan to apply for grad school, start planning your next move as early as possible. You don’t need to wait until your final undergrad semester to get the ball rolling. Start researching grad schools of your choice as soon as possible and begin compiling dossiers on all the programs of interest to you.

The most important outcome from this step is a clear understanding of all the prerequisites for entry into the program and their associated costs.

Step 2: Prepare Your Short List

Fact: Not everyone can afford to pay for their first-choice grad program. Whittle down your schools to a short list of 4 or 5 programs that best meet your expectations. Your degree cost can change, depending on whether you:

  • Choose public institutions or private schools
  • Opt for in-state or out-of-state education
  • Study online or on a campus

In addition to tuition, be sure to add other costs such as application fees, testing costs, housing, books and supplies. You may need to add travel requirements in order to attend grad school events, such as seminars and workshops, vacation and home visits (especially if you plan to study out of state).

Step 3: Take Stock of Your Current Financial Position

Once you understand the overall costs, look at your financial resources to figure out how to pay for your degree.

  • Do you have enough savings set aside?
  • Can you earn what’s needed by yourself?
  • Are friends and/or family willing to lend (or gift) you the money?

If you use a budgeting app, review your financial position, including detailed income and expense-tracking. If you find you’re still short of funds, it’s time to look into financial aid.

Step 4: Evaluate Grants and Scholarships

Before you venture out and apply for a loan, check out your eligibility for any state or local grants. A good start might be:

Alternately, research your eligibility for grants, scholarships or fellowships available from private organizations and the institutions you plan to apply to. Examples of such opportunities include:

Depending on your field of study, these funding options may cover tuition, housing and could even include a stipend.  

Step 5: Get Paid as You Learn

If eligible, you may also be able to pay for your graduate education in exchange for working part time, either on or off campus. The Federal Work-Study program is tailored specifically to support undergrad and grad students earn money through work to pay for their education while enrolled in a course of study. 

Some colleges and universities offer graduate assistant programs that allow students to work as assistants to faculty members. Grad assistantships are typically salaried positions, and the money you receive can help defray some of your tuition and other grad school costs. Individual academic units (departments/faculties) generally control these positions. You should speak with the administrative offices about graduate assistantship program opportunities.

Another option is to work as a teaching or research assistant at your college or university and use your stipend to pay for part of your grad school costs. Typically, individual faculty members offer these positions to students. You can approach the dean of faculty or a professor to find out what opportunities exist, or ask about them when you apply for grad school.  

Step 6: Apply for Federal Loans   

You may also be eligible for long-term, low-interest loans. The federal government provides funds to participating institutions, who then lend the money to students. You can apply for one of the following types of loans through the William D. Ford Federal Direct Loan Program.

Federal Direct Unsubsidized Stafford/Ford Loans

You can apply for this loan regardless of financial need. However, borrowers must pay interest and repay the principal on the loan.

Federal Direct PLUS Loans

PLUS loans are restricted to parents of dependent students. The parent bears all interest charges and is responsible for the repayment of the amount lent.

Qualifying students can receive federal loans directly through participating institutions, often within days of applying. 

The other advantage of using government loan programs is that the terms and conditions of the Federal loans are set by law, including flexible income-tested repayment plans and fixed interest rates. You or an eligible parent or guardian can apply for an appropriate federal loan by filling out a Free Application for Federal Student Aid (FAFSA®).

Step 7: Apply for Private Loans  

If you don’t qualify for a federal or state grad school loan, look into private loans. These are loans are offered by private for-profit financial institutions. Examples of such financing include:

Each private lender its own set of eligibility criteria and may offer different loan amounts at varying interest rates. Typically, private for-profit lenders apply more stringent criteria to assess loan eligibility than those used by federal or state student loan administrators.  

Step 8: Explore Tax Breaks

The IRS offers several tax breaks that you or your parent or guardian can take advantage of, including the American Opportunity Credit and the Lifetime Learning Credit. The American Opportunity Credit allows you to claim up to $2,500 a year for 4 years of your degree.

If you already used it for your undergraduate degree, you won’t be able to use it for graduate school unless you graduated a semester or a year early and can apply the remaining of the 4 years toward the American Opportunity Credit.

The Lifetime Learning Credit enables you to claim up to $2,000 per year toward tuition and fees as well as books, supplies, learning accessories and supplies.

Before taking advantage of any of these tax breaks, make sure you meet all the criteria associated with qualifying for the tax break, including income levels and other eligibility tests. As you file your taxes, don’t forget to also take advantage of the student loan interest deduction. This deduction applies not just to federal or state loans, but to all types of loans.

Make Your Decision

Ideally, the search for grad school funding options should start with your own resources. If you can’t afford to fund your program on your own or through financial support of friends and family members, consider available grants, scholarships or fellowship programs that will pay for your degree. 

If you want to pay off student loans from graduate school, consider debt restructuring, or consolidate some of your existing loans and cut down on some of your expenses. If you do need to borrow money to pay for your education, tap into government loans first before you turn to private sources. 

Finally, consider getting a job that will pay for you to go back to school. Many companies offer some form of tuition benefit if you decide to work and go to school at the same time.

The table below should help you decide which of these two sources are a good fit for you:  

Grad school funding options compared – Government Vs. Private loans


Federal Student Loans

Private Student Loans


Usually until after you graduate or if you change your enrolment status

Typically, while you are still enrolled and studying. Some may offer deferral while still in school

Interest rates

Fixed – usually lower than private loans

Fixed or variable. May be higher than federal loans


Subsidized loan options mean the federal government pays interest on loans of students in financial need

Subsidies are typically not offered. Students are responsible for paying all interest

Credit checks

Except for PLUS loans, no credit check is required

Most private lenders have mandatory credit checks

Loan consolidation

The best way to save money to help pay for your grad school is by consolidating multiple loans into a single vehicle. The Direct Consolidation Loan program allows several outstanding loan balances can be amalgamated to simplify loan management and repayment

Private lenders typically won’t allow loans to be consolidated via the Direct Consolidation Loan program


Under acceptable circumstances, you can apply to temporarily postpone loan repayment

While some lenders may entertain postponement, you will need to verify the circumstances under which that’s allowed

Prepayment penalties

No such penalties exist

Depends on individual lender’s policy

Loan forgiveness

If you work in public service you may be eligible for partial forgiveness of your loan

Typically, not offered by private lenders


Lend-Grow offers 5-, 10-, 15-, 20- and 25-year student loan refinance terms with fixed rates as low as 2.80% APR and variable rates as low as 1.89% APR. 

Lend-Grow pays down your loan, too — 0.10% APR every month for 3 years! Here’s what this means: Lend-Grow deposits 0.10% APR of your loan amount funded each month for up to 3 years (as long as your account is active) with payback rewards. 

Lend-Grow deposits the payback reward directly to the loan account you specify at the time of Payback Reward enrollment. Payback reward is not a rate discount and you must continue to meet your full payment obligations with the lender each month.