Professionals with a graduate degree typically earn higher salaries than those with only a bachelor’s degree. In fact, a graduate degree translates into $12,000-$30,000 more in median earnings each year. However, graduate school is a major investment. On average, students spend around $25,000 on a master’s degree.
Students should start thinking about how to pay for graduate school as soon as possible so they can start planning their finances accordingly.
Start Saving for Graduate School Early
Students should start saving for graduate school early. Planning ahead means more time to apply for scholarships, fellowships, and grants. Some graduate fellowships only accept applications from juniors and seniors in college, so waiting too long means missing out on opportunities.
Research Schools and Programs Early
On average, graduate students spend nearly $25,000 on their degree, and some programs cost much more. Researching programs early helps prospective applicants find a program that fits their budget. On top of tuition, students should factor in the cost of standardized tests, like the GRE or GMAT, application fees, books, and living expenses.
Additionally, tuition costs might increase by the time undergraduates enter graduate school, so students should factor this prospect into their plans to pay for graduate school.
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FAFSA and Financial Aid
Graduate students often qualify for federal student aid programs, including grants, loans, and work-study programs. To receive federal aid, students must submit the Free Application for Federal Student Aid, or the FAFSA. Graduate students automatically qualify as independent adults, so applicants do not need to provide parental financial information.
Federal aid for graduate students differs slightly from undergraduate aid programs. Graduate students do not qualify for Pell Grants or subsidized loans. However, they can borrow PLUS loans or unsubsidized loans, apply for TEACH Grants, and take work-study jobs.
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Saving for Graduate School With Budgeting
Graduate students pay for around a quarter of college costs out of pocket. Creating a student budget as an undergraduate can help students with saving for grad school. Budgeting particularly helps working students control their expenses and set aside money for graduate school.
A 529 college savings plan offers tax-advantaged savings for educational expenses. While most people think of 529 plans as a way for parents to save money for their children’s college costs, students can open their own 529 plan and make contributions to pay for graduate school.
In some states, 529 plans provide tax discounts. And in every state, the money grows without taxes, making a 529 plan a great vehicle for college savings.
More than half of graduate students borrow money when paying for graduate school, and 49% of graduate students who take out federal loans expect them to be forgiven. However, borrowers must meet specific requirements to qualify for loan forgiveness.
The federal student aid program offers several loan forgiveness and cancellation programs. The most common programs include the public service loan forgiveness program and the teacher loan forgiveness program. Both programs set employment standards for borrowers. For example, teacher loan forgiveness waives up to $17,500 in loans for educators who work in a low-income school.
Borrowers often make payments on their loans for 5-10 years or more before qualifying for forgiveness, so students should budget for those payments.
Genevieve Carlton holds a Ph.D. in history from Northwestern University and earned tenure as a history professor at the University of Louisville. An award-winning historian and writer, Genevieve has published multiple scholarly articles and a book with the University of Chicago Press. She currently works as a freelance writer and consultant.
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