Paying for Graduate School: Tips from the experts

There’s no easy way around it: Graduate school is a big challenge. A lot of hard work, patience, and dedication are just part of what you’ll need to prepare for. Unless you recently won the lottery, chances are you’ll need some financial help as well. Now more than ever, there are numerous financial solutions designed for students just like you. Knowing your options and making smart money moves can make graduate school an investment that pays.

Step 1: Plan ahead & get organized

When it comes to any big decision, planning ahead is vital. With graduate school this is especially true. Aside from comparing course schedules and deciding on a school, you’ll need to answer these important questions:
What will school cost?
This question might be more complex than it first seems. Beyond tuition and books, you need to nail-down some solid estimates on all your monthly expenses.
Approximately how much will you earn after school?
This isn’t a question you want to ask after you have your degree. Start researching your chosen profession today.
With this information, you will have a better idea of how much financial help you’ll need, and just as importantly, how much you’ll be able to repay.

Step 2: Look for “free” money first

Free money? Yes, it’s out there, but finding it can take some work.
Start by looking into scholarships, grants, fellowships, and paid internships. Check with your employer regarding tuition reimbursement opportunities. If eligible, these can all be excellent resources, and better yet, it’s money that doesn’t have to be repaid.
It’s also a good idea to take advantage of the programs that are offered by the federal government. To get an idea of what kind of assistance might be available, visit Students.gov (new window). Here you will find links to government web sites that cover everything from scholarships and fellowships to grants and volunteer programs. It’s also likely that you will be able to find assistance designed specifically for individuals in your chosen field of study.
If you’re unable to participate in any of these programs, check with your school. Research and teaching assistants often enjoy reduced tuition in addition to an excellent academic experience.

Step 3: Research government loans

If savings, scholarships, or other options don’t meet your projected budget, it’s likely that you’ll need to apply for an education loan.
Look into government loans first. These low-interest loans come from private lenders like Educaid or, in some cases, directly from schools. These loans are guaranteed by the federal government and have excellent repayment terms.
Get started by filling out your Free Application for Federal Student Aid (FAFSA). This important report will determine your level of financial need, which in turn will determine the level of financial assistance you can expect from the government. The FAFSA is available from any financial aid office, the public library, or online at www.fafsa.ed.gov.

Federal Stafford Loans: Federal Stafford Loans are available to students who need help paying for their education. These popular loans are available in both subsidized and unsubsidized versions, depending on your level of financial need. With the Subsidized Stafford, the government pays the interest on your loan during the following periods:

While you are enrolled in school at least half time.
During the six-month grace period after you stop attending school at least half time.
During periods of authorized deferment.

The Unsubsidized Stafford, on the other hand, is available to all students regardless of income. Because the government does not subsidize this loan, you are responsible for all interest that accrues while you are in school, in deferment or during your grace period. You may choose to make interest payments while in school or may defer (and accumulate) the interest until repayment. The financial aid office at your school can help you to determine which loan type you are eligible to receive.

Borrowing Limits: The maximum loan amount you can borrow annually is $8,500. If you have both Subsidized and Unsubsidized Federal Stafford Loans the combined annual loan limit is $18,500.
Interest Rates and Fees: For both types of Stafford Loans, the maximum interest rate is 8.25% for the life of the loan. The actual interest rates are variable and are adjusted each July 1. Currently the interest rate stands at 5.39%.
Repayment Terms:For six months after you graduate, withdraw from school, or drop below half-time enrollment, you don’t have to make payments on your loan. When this “grace period” ends, you’ll make monthly payments for up to ten years, depending on the amount you owe.

Step 4: Research alternative loans

Alternative loans often meet funding needs that government loans cannot. Not all Lenders are alike! You’ll have a long-term relationship with the company you choose, so don’t make this decision too hastily. Here are a few things to consider:

How long will a lender take to process your student loan application and disburse your funds? Different lenders provide different levels of service. Ask your financial aid office to help you verify this information.
Who will actually be servicing your loan and at what time? If your lender uses more than one servicer to process payments, ask if it will keep all of your loans together at the same servicing site.
Consider combining your loans. If all of your same type loans (for instance, all of your Federal Stafford Loans) are serviced in one place, they can be combined or consolidated into one monthly payment. That alone can lower your monthly payment and it makes repayment easier.
Try to get all of your loans from one lender. If you stay with the same lender, some schools allow you to take out multiple Federal Stafford Loans without filling out new paperwork each year. If you change lenders while you’re still in school, your loans may end up at different servicing companies. This will mean making multiple payments instead of just one.
Pick a lender that can save you hundreds or thousands of dollars during repayment. Some lenders reward students with excellent repayment practices by reducing the interest rate on the loans or providing rebates.