If you're thinking about going to graduate school, you'll need to figure out how to pay for it. With tuition alone costing thousands of dollars, you should explore every avenue for financing your education. Start planning early, research schools and programs, and consider loans, scholarships, and working part time, among other things.
Start Early
The earlier you start planning on going to graduate school, the earlier you can start planning how to pay for it.
Consider whether your study relates to your current job. Your employer may offer a continuing education or tuition reimbursement program, or be willing to consider starting one. Or, you may want to think about changing jobs if a competitor has such a program. In the long term, having an employer contribute to your education will save you money and will probably provide better career development opportunities.
Prepare your application and resume. Think about how your current job, volunteer activities, or educational experience has prepared you for your chosen field. Then fill in any gaps. Having a well-rounded resume will make you competitive for financial aid like scholarships or fellowships.
Get ready for any standardized tests. Most graduate programs require that you take a standardized test, such as the Graduate Records Examination (GRE) or Medical College Admission Test (MCAT). Schools look at these scores to decide whether to admit you and how much aid to offer. Investing in a preparation course or program is worthwhile if it boosts your score.
Fill out your FAFSA. You may already be familiar with the Free Application for Federal Student Aid (FAFSA). It's usually due at the end of June: don't miss the deadline or you're apt to miss out on some federal and private funding. Find out more at www.fafsa.ed.gov.
Make sure you know what you want to study. As many as 40% to 50% of graduate students drop out of their programs before completing them. If you're not truly interested (you choose law school solely because your dad is a lawyer, for example), you're less likely to finish. Better to do some soul searching now to be sure you're studying something that you enjoy. Part-time jobs or internships offer good test runs in a chosen field.
Research Schools and Programs
Once you've calculated the costs you're going to incur, think about the schools you'll apply to. Here are some of the financial considerations to help you make that choice.
Research post-graduation employment rates. While this won't help you pay for school, it will help you figure out how likely it is that you'll be employed after graduation (and how much you can expect to make), which will be important if you're paying off student loans (discussed further below).
Choose a Ph.D. over a Master's degree. Often, Ph.D. programs come with stipends or teaching or research assistant positions. The end result? They usually cost very little, or you may make enough to cover your expenses during the academic year.
Consider location. Your expenses will be dictated in large part by where you live, so going to a school in a big city generally will be more expensive than going to school in a small town. On the other hand, it may be easier to network and find a job if you already live in the city, if that's where you plan to be in the long term.
Look for Free Aid
There never seem to be enough sources of free aid. Here are some suggestions for where to look.
Scholarships. Scholarships are available based on many different criteria: financial need, merit, and chosen field, for example. You can find many scholarships online; start with at an aggregating site like www.fastweb.com. But also investigate school-specific scholarships for the institutions you're considering attending.
Find out whether scholarships continue during the entire duration of your education, only cover the first year of schooling, or are capped at a certain amount. Some academic institutions offer generous scholarships upfront, but you must reapply each year or maintain very high academic performance to qualify the next.
Fellowships. Fellowships are another way to finance your education and academic research. Like many scholarships, they are usually based on a combination of need and merit, and may be tied to a particular academic institution or program. In addition to looking for opportunities on campus, check out the www.gradschool.cornell.edu).
Grants. Grants are funded by federal and state governments, as well as schools. Though usually based on need, many grants require minimum levels of academic performance.
Consider Work Options
You may consider working to finance all or part of your education. Make sure you know whether there are any limits on how much you are allowed to work. For example, full-time students at law schools accredited by the American Bar Association are not supposed to work more than 20 hours per week.
Become a teaching or research assistant. You will usually receive a stipend or salary for teaching classes, leading discussion sessions, or doing research for a professor. In addition to helping cover your costs, you'll be able to develop skills in your chosen field.
Choose a job with few demands. Alternatively, you can take a job with few demands outside the workplace. You'll already be busy with school: look for something that will allow you to focus on your schoolwork when you need to, even if it pays a little less.
Use Federal Work-Study. The Federal Work-Study program allows you to work part-time on campus or at a participating non-profit or public interest organization. (In some cases, even for-profit corporations can participate if the work is in your field of study.) The amount you can make is determined by the amount of your award; the advantage for the employer is that the federal government pays some portion of your wage.
Take Out Loans
If you're like most students, the above options won't cover everything, and you'll need to take out student loans. But not all loans are created equal. Here are some options and considerations. Note that to qualify for the federal loan programs, the school you attend must participate in these federal programs.
Perkins loans. Perkins loans are need-based, low interest loans administered directly through educational institutions and funded by the federal government. As with other federal loans, Perkins loans can be deferred or go into forbearance during tough economic times.
Perkins loans do not accrue interest while you are in school, and give you up to a nine month "grace period" after completing your education before you must start paying back the loan. Borrowers may be able to discharge debt if they teach, join the military, or enter public-service careers. For more information, visit the U.S. Department of Education's www.ed.gov).
Subsidized Stafford loans. Subsidized Stafford loans are need-based loans available at relatively low interest rates. Interest does not accrue while you are in school, and you have a six month grace period before you must begin repaying the loan. You also have the opportunity to defer your loans, put them in forbearance, or even discharge them if you do certain types of work. The annual maximum you can borrow (in 2008) is $8,500 ($65,500 total).
Unsubsidized Stafford loans. These have many of the same features of subsidized Stafford loans, including the interest rate and grace period, but interest begins to accrue as soon as you take out the loan. (If you don't pay the interest before your first payment is due, it will be added to your principal.) Above the annual $8,500 you can borrow with a subsidized Stafford loan, you can take out an additional $12,000 in unsubsidized loans each year. The overall limit on Stafford loans is $138,500.
PLUS loans. If your expenses exceed the amount of financial aid you receive from the sources listed above, you may be eligible for a PLUS loan. PLUS loans have higher interest rates than Stafford or Perkins loans, and if you have a poor credit history, you will need a co-signer. Also, there is no grace period after you graduate -- you must begin repayment immediately. On the plus side, there are no limits to the amount you can borrow on a PLUS loan -- it's determined by the amount of your unmet need.
Private loans. Many institutions and other lenders offer private loans. But pay careful attention to the interest rates, which generally aren't as favorable as government loans. Also, these loans don't usually have the repayment or consolidation flexibility that federal government loans do.
Family and friends. Don't overlook the possibility of borrowing money from family members or friends. You can pay a fair interest rate, help someone you know earn a return on a stable investment, and probably work out an arrangement for a flexible repayment plan if you need it.
Home equity. If you own a home, you may be able to borrow against the home's equity. This sometimes has the advantage of a lower interest rate, plus the interest on the loan is tax deductible.
To learn about paying off your student loans, read Solve Your Money Troubles: Get Debt Collectors Off Your Back & Regain Financial Freedom, by Robin Leonard, J.D. (Nolo).
Copyright 2008 Nolo