Advertisement
Paying for College

Best Ways to Pay for Grad School

Getting an advanced degree isn't cheap. But you may not need to go into debt.

Probably the worst Christmas present I ever got was a bill for $31,000 in student loans from Uncle Sam in December 2015. A few weeks earlier, I'd received my master's in mass communications.

I'll be honest: My decision to pursue an advanced degree was made more out of fear than foresight. I was placing my bets on a career in an industry not known for six-figure salaries or job security (see 10 Best College Majors for a Lucrative Career). During my final semester as an undergraduate, I worried that a bachelor's in journalism wasn't going to cut it in the real world, so I made what seemed like a safe bet: incur debt now for a better future later.

Advertisement - Article continues below

Certain professions, such as medicine and law, require advanced training. Many others–including mine–don't. In these fields, consider whether a graduate degree is worth the cost, especially if you have to put your career on hold while you're in school.

The average annual tuition for a graduate degree at a public college or university is $30,000; for a private school, it's $40,000, according to Peterson's, a college information company. (If you get a doctorate, it will take several years, and you'll spend much more.)

Advertisement
Advertisement - Article continues below

Lighten the load. Many universities offer grants, scholarships and assistantships, including teaching assistant and graduate assistant positions, to help students pursuing advanced degrees offset the cost of tuition. The average T.A. made $26,260 last year, while the average G.A. made $37,720, according to the Bureau of Labor Statistics. Doctoral candidates are typically more likely than master's candidates to receive departmental assistantships. If you're employed, see whether your company sponsors a tuition assistance program. The IRS allows employers to provide up to $5,250 in tax-free education benefits a year; any benefit above that is considered taxable income. Some employers will cover the entire cost if you agree to work at the business for a set period after graduation.

Advertisement - Article continues below

If you're willing to join the military, you may be able to get a full ride for a degree in dentistry, medicine, nursing, optometry or veterinary care. Those admitted to the Armed Forces Health Professions Scholarship Program receive funding for tuition, books and fees, along with a $2,200 monthly stipend and a $20,000 sign-on bonus. After graduating, you'll owe one year of military service for each year you received support, with a minimum of three years.

Or you can borrow, which is what I did. Direct unsubsidized loans for graduate students carry a 6% fixed interest rate for the 2017-18 academic year, and you can borrow up to $20,500 a year. If that doesn't cover your costs, Grad Plus loans allow you to borrow up to the full cost of graduate school, including living expenses. The interest rate for Grad Plus loans taken out before July 1 (when rates will be adjusted) is 7%. You likely won't qualify if you've had a bankruptcy, foreclosure or similar black mark on your credit record within the past five years.

Unless you have excellent credit and are certain you'll have no trouble making payments, consider private loans as a last resort. Unlike federal loans, they typically don't come with repayment options, such as deferment or forbearance. Rates, which can be fixed or variable, are based on your credit record and whether you have a cosigner. Co-signers are on the hook for repaying the debt if you default.

My bosses at Kiplinger tell me that my master's degree gave me an edge when I was hired as a reporter. I'm now debt-free, thanks to a bare-bones lifestyle that enabled me to put one-third of every paycheck toward repaying my loans. But a couple of years of frugality was a small price to pay.

Advertisement

Most Popular

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)
tax deadline

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)

Between due dates for IRA or HSA contributions, paying estimated taxes and other deadlines, there's more to do by July 15 than just filing your federa…
July 10, 2020
65 Best Dividend Stocks You Can Count On
stocks

65 Best Dividend Stocks You Can Count On

These 65 Dividend Aristocrats are an elite group of dividend stocks that have reliably increased their annual payouts every year for at least a quarte…
July 8, 2020
Know Why Your Credit Score Changes: 9 Money Moves to Consider
credit & debt

Know Why Your Credit Score Changes: 9 Money Moves to Consider

Your credit score is a key indicator of your financial well-being and of the risk you pose to lenders. How good is yours?
July 10, 2020

Recommended

Tax Changes and Key Amounts for the 2020 Tax Year
tax law

Tax Changes and Key Amounts for the 2020 Tax Year

Americans are facing a long list of tax changes for the 2020 tax year...and it's never too early to start thinking about next year's return.
June 22, 2020
7 Ways the Pandemic Will Change College Forever
college

7 Ways the Pandemic Will Change College Forever

Colleges and universities face steep budget cuts, enrollment challenges and new types of competition as a result of COVID-19. We cover the changes you…
June 19, 2020
12 Tax Deductions and Credits That Help You Pay for College
Tax Breaks

12 Tax Deductions and Credits That Help You Pay for College

Whether you're saving for college, currently paying tuition, or dealing with student loan debt, there's probably a tax break that can help your bottom…
June 12, 2020
Milliennials Face Their Second Recession
credit & debt

Milliennials Face Their Second Recession

Forty percent of millennials say the pandemic will likely cause them to delay payments on their debts. Does that include you? Time to take action.
June 4, 2020