How to pay for graduate school

Thinking about attending graduate school? Going to graduate school can be a great move. For many, an advanced degree is essential for certain career paths such as law or medicine. For others, it’s beneficial for job advancement or career changes especially when the credential is preferred by an employer.

No matter what your reason is for pursuing an advanced degree, graduate school is a big commitment of time and it often comes with a hefty price tag that can add to your student loan debt. According to educationdata.org, the average graduate student loan debt balance in 2022 was about $103,000 among federal loan borrowers. So, how do you pay for graduate school without breaking the bank? Here are a few tips.

Fill out the FAFSA

You should already be familiar with the Free Application for Federal Student Aid (FAFSA) if you applied for financial aid as an undergraduate student. You’ll need to fill it out for graduate school even if you don't think you'll qualify for or use federal aid. It’s still worth it to complete the form since the FAFSA is required before applying for a grad PLUS loan and may be necessary for some merit-based scholarships or other grants from your school.

Look for free money

Smart planning can help you borrow less money for graduate school. Anything you can do to cut down on the amount you have to take out in loans will benefit your financial future. Here are just a few ways to whittle down that bill.

Apply for grants and scholarships

Grants and scholarships are the best way to pay for graduate school since they don’t need to be paid back. In addition to seeing if you qualify for merit scholarships or other grants from your school, search for other scholarships available from industry trade groups or organizations in your local community.

Consider a teaching or research assistant position or a fellowship

Schools may offer a stipend and reduced or free tuition to graduate students who help teach undergraduate classes or work on research projects for the school. Some schools and external organizations also offer fellowships to graduate students that will cover the cost of their education in a particular field.

Use a tax-advantaged account

If you know that you’re definitely going to go to grad school in the future, put money aside in a 529 account. The money will grow tax-free, and you'll be able to withdraw it tax free for qualified educational expenses. (Keep in mind, however, that if you change your mind and decide not to go to school, you may incur a penalty to access those funds.) Consult a financial planner or tax advisor when comparing savings accounts.

Look into employer tuition reimbursement

Many employers offer tuition reimbursement for employees to continue their education as part of their benefit package. Talk to your HR department to find out whether your company will contribute to the costs, and whether there are any requirements to take advantage of the program. Some employers, for example, will require that you remain with the company for a year or two after receiving reimbursement, or require you to return the funds if you leave earlier than the designated time.

Consider student loans to cover the gap

If you need to borrow money for graduate school, you have several options to explore. When shopping for student loans, be sure to consider and understand both your federal and private student loan options.

Federal student loans

Unlike loans for undergraduates, the government doesn’t offer need-based subsidized federal loans for graduate students. However, there are two unsubsidized federal loan options to help you pay for graduate school costs:

1. Direct Unsubsidized Loans are made to eligible undergraduate, graduate, and professional students. Eligibility is not based on financial need and the total amount you can borrow is capped.
2. Direct PLUS Loans have an option for graduate and professional students to cover expenses not covered by other financial aid. These loans commonly referred to as grad PLUS loans, and eligibility is not based on financial need. Most schools require you to submit your application online and a credit check is required.

Private student loans

If you need to take out private student loans to help you pay for graduate school, shop around to determine which private student loan lender is best for you. In addition to comparing the interest rates and fees on loans, you'll want to understand the repayment terms. Private student loans require a credit check as part of the application process. If you have a low credit score or don’t have credit history, you may benefit from applying with a creditworthy cosigner.

Developing a payment strategy that utilizes the options above can help you pay for graduate school and help manage your debt.

^{FAFSA® is a registered trademark of the US Department of Education and is not affiliated with Discover® Student Loans.}