Navigating Payment Options for Graduate School

payment options for graduate school

Unless you are in the minority group of people able to pay out of pocket, chances are that you will need some sort of financial assistance to cover the cost of your graduate degree. Figuring out where the money will be coming and navigating payment options for graduate school can feel almost like piecing together a puzzle in that typically multiple sources will contribute to the total cost. Once you are admitted to grad school, the timeline to starting is kicked into high gear, so thinking about the financial aspects of attendance ahead of time gives you an opportunity to digest that information before you are forced to make real decisions. 

Private Loans

You can take out student loans from a private lender in order to pay for your graduate degree. These loans are not subject to specific terms or fixed rates like federal loans would be. What this means is that the lender you select for your graduate loans can raise your interest rate at any time. Private lenders are in competition with one another for your business so be sure that you shop around the best rates and lead with the approach that you have the upper hand. Be mindful however that there can, and likely will be, fluctuation with the variable interest rates, so when playing around with numbers for monthly payments, and total amount to be repaid, there is going to be some variation in the eventual totals. 

Graduate loans differ slightly from undergraduate in terms of approval factors as well. Likely when you were applying for undergrad, you had little to no credit, and little to no financial history. At this stage you have probably established a financial reputation for yourself, including a credit score, so loan approval and interest rates will be based off your current financial standing; and hopefully be more favorable towards you. 

Federal Loans

This type of loan is arguably one of the most common payment options for graduate school. There are two categories of federal loans, those that are borrowed directly from and paid back directly to, the government, and those that are dispersed through private lenders such as banks or credit unions. Interest rates can really be the determining factor when thinking about which of these types of graduate loans is right for you. The longer you take to repay this debt, the more interest you will rack up, and the higher the end total will be. 

Unlike private, federal loans will come with a fixed interest rate, so you will be at an advantage for being able to determine closer to your exact monthly total as well as total repaid amount overall. Terminology like subsidized and unsubsidized is also important and applicable when talking about federal funding. Again, with interest being a huge factor in any loan, understanding how much of it you will be responsible for, and on what timeline, will make a huge difference in sticker shock when you get that first post-graduate bill in the mail. 

Funding Alternatives

If you are attending graduate school as a working professional or already have key assets like a home and a savings account, you can consider other loan and investment options to cover the cost of your graduate degree. Home equity loans, Education IRA’s, and 529 Plans can all be considered when mapping out alternative options to cover the cost of enriching your education. Understanding how these alternative options will affect your short-, and long-term financial health should be researched and discussed with a financial professional beforehand though, to ensure that you are not essentially robbing Peter to pay Paul, and sabotaging your financial future in the process. 

For the time period that you expect to be in graduate school, it is essential that you outline a personal budget for yourself, especially if you are considering paying out of pocket for any portion of your tuition. Grad school is a worthwhile investment in your future and what you spend now will pay off later, however you want to make sure that your lifestyle and current relationship with money can bear the weight of this new burden for a sustainable length of time.  Hopefully this list of tips for navigating payment options for graduate school can help you find your way forward.

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