Student loan debt is a growing problem in the United States. Americans currently owe more than $1.6 trillion in student loans—a jump of $1 billion over the last year and a whopping $900 billion in the last decade, according to the Federal Reserve Bank of St. Louis.
Though any college student can incur debt for seeking higher education, graduate school participants see some of the highest levels of it upon leaving school. The most recent data from the National Center for Education Statistics shows grad school students emerging with anywhere from $66,000 to $186,600 in debt, with doctoral students claiming the highest levels.
Are you considering grad school but worried about the high costs? Here are four ways you can pay for it (including two that can help you avoid debt altogether):
1. Grants, scholarships, assistantships, fellowships and work-study programs
Graduate school scholarships and grants are your best option for covering the costs of school, as they don’t acquire interest and don’t need to be repaid. Some scholarships and grants are need-based programs, while others may be merit-based, so check with your school and program to see what might be available. There also may be industry-specific options you can apply for (or even ones your employer or a family member’s employer offers). Check out this list of grants for graduate school and this tool for a variety of scholarship options.
You can also work for your school or department to offset your costs. Many grad school programs offer teaching assistant jobs, work-study positions and research fellowships that either cover part of your tuition or offer a periodic stipend in exchange for your work. Both options can help you reduce the costs of your education.
2. Employer reimbursement
If you’re employed full-time—especially at a large corporation—then there’s a chance your company offers tuition reimbursement, at least partially, for qualifying grad school programs. Many companies offer these benefits as a form of professional development, as well as a way to retain employees for the long haul.
Depending on how your company’s program functions, you might see some or all of your education costs covered. (You may have to attend a particular school or degree program to get it, though).
3. Federal student loans
Another type of financial aid for graduate school is federal student loans. As of early 2020, there are two types of federal loans for graduate students: Graduate PLUS loans and Stafford loans, also called Direct Unsubsidized Loans. To see which ones you’re eligible for and how much you may be able to take out, you’ll need to fill out a Free Application for Federal Student Aid (or FAFSA).
Graduate school students can enjoy a nice little perk by using these loans over private options. For one, there’s a chance you may be eligible for an income-based payment plan, which can help make your monthly payments more affordable once you’re out of school. Additionally, if you go into public service, you may see your debts forgiven entirely.
4. Private student loans
Your last line of defense should be private loans. These typically come with higher interest rates than federal loans, and they might require payments while still in school, too (federal loans let you defer until graduation). On top of this, the application process may be harder. Private lenders require a credit check when evaluating borrowers, so you may need a cosigner if your credit history isn’t deep (or your score is too low).
To get the best rates on private loans, you might consider using a credit union or going to a financial institution or bank you already have a relationship with. This can often qualify you for better interest rates than other lenders are able to offer.
A word of caution
Be careful when considering your grad school loan options. Make sure you weigh the costs of your education against the benefits you stand to gain from it in the long run. (For reference, the average grad school costs just under $19,000 per year).
Is it worth the money? Will you earn that cash back and then some with a higher-earning career? Use the Department of Education’s College Scorecard website to get info on average earnings for your school and degree program. There’s a chance that staying the course and climbing that career ladder can benefit your finances just as much (or even more) over time.