Paying for Grad School: Plan Ahead to Get Ahead

Almost 12% of college graduates default on their student loans within three years of graduating (NCES, 2016). Don't fall into this trap. Start by looking at your current situation and how it fits into your (fiscally responsible) grad school plans.

Thinking of attending graduate school? Congratulations! You are placing yourself in the top 10% of the US population, and your desire to obtain a graduate degree will give you a competitive advantage professionally and economically. Of course, the great paradox is that this graduate degree that can boost your earning potential usually comes with a pretty significant price tag…

That’s why it’s important to plan ahead. Giving yourself adequate time to prepare is critical to meeting your financial obligations—and to avoid defaulting on your payments. Almost 12% of college graduates default on their student loans within three years of graduating (NCES, 2016). Don’t fall into this trap. Start by looking at your current situation and how it fits into your (fiscally responsible) grad school plans.

Where are you in the grad school process?

Where you are in your educational journey can have a big impact on your financial opportunities. Take a look at some of the options and ideas you should consider when deciding how to finance your graduate degree. Which one of these situations describes you?

Current undergrad

Plan as far in advance as you can! Even if you’re an underclassman just idly thinking about grad school, look into the graduate admission application, testing, and financial requirements to get a sense of what the process entails. Don’t wait until the last minute. And if you’re early enough in your undergrad career, you may be able to enter a combined/dual-degree program, which can also save you money.

Colleges are always looking for pipelines into their graduate programs. Having students come directly from undergraduate programs is music to their ears. They know you are the quality student they want, and many colleges, especially private universities, will have special discounts for alumni. For example, if you achieve a certain GPA as an undergrad, your school may waive your graduate entrance exams and/or application fees, and you may be eligible for a tuition discount as an alumnus.

If you are an upperclassman, start looking for your graduate program now! Knowing the costs and transition plan to graduate school is very helpful—and can save you from a lot of surprises. For example, in most cases, you will no longer have the same housing and dining requirements you did as an undergrad. You should also figure out your lifetime borrowing limits; is a great resource to determine your borrowing ability and provides guides on how to budget accordingly. And whatever you do, if you have any loans for your undergraduate degree, make sure you notify the loan originator of your enrollment into graduate school if you wish to defer your payment plan.

Working college grad

If you have a baccalaureate degree and are already in the workforce, you have several unique options available to you as a potential grad student.

First, see if your company offers any tuition reimbursement as part of your benefits package. Just be sure to carefully read the terms and conditions of the tuition reimbursement offer; in many cases, they may be as simple as achieving a passing grade, but you may be committing to staying at your current job for a number of years after you graduate as well. Or there might be a cap on that funding. Learn the amount and budget accordingly.

You might also want to investigate how enrolling at different colleges will earn you the most return on your investment. (Pro tip: get a job with your graduate school if you can; many have tuition waiver programs!) Some colleges will allow you to sign up for a deferred payment program if they have an agreement with the company that you work for, and some private universities will bolster your grant with an additional discount off the tuition price for attending. Most colleges and universities are well aware of these benefits and have well-educated financial aid professionals to assist you with planning your tuition budgeting for your graduate career.  

Next, assess your career goals and current living situation. Are you financially able to go back to school full time or part time? How will grad school impact your current financial responsibilities, from rent to childcare expenses? If you’re living with a partner and sharing your finances, how might grad school impact that person? 

High school student

Excellent! You have the most time on your side. Look for 2+3, 3+1, or other dual-admission programs that combine your undergrad and graduate degrees. Some colleges have pre-professional pathways that are customized to specifically prepare you for graduate programs too. These can be big cost-savers in the long run.

As mentioned above, planning ahead is key to grad school affordability. If you plan to enroll in your undergraduate program soon, you have plenty of time to take advantage of pre-professional undergrad tracks that specifically prepare you for the professional degree you hope to attain. In addition, many colleges have special advising and consistent interaction at the undergraduate level with the graduate college to continue the relationship.

Do you need to pay that back?

Most graduate school funding falls into one of three categories: the money you don’t have to pay back, the money you do have to pay back, and the money you might need to pay back, depending on your situation. Obviously the less money you need to pay back, the better; however, most graduate students these days find themselves with an amalgamation of funding sources. Where does your grad school funding fit?

No, you don’t have to pay it back:

• Scholarships/grants
• Graduate/teaching assistantships

Funds that you do not have to pay back include scholarships, graduate assistantships, and grants. It may be “free” money, but you definitely earned it! Apply for teacher’s assistant and graduate assistant positions. Also, as previously mentioned, some universities have dual-degree programs that guarantee your spot in the graduate program as an undergrad (provided you meet certain criteria). This may also include funding.

Yes, you do have to pay it back:

• Federal/state loans
• Private loans

Just like in undergrad, you have a variety of federal, state, and private loans available to you. In this case, as a graduate student, you are automatically considered independent and therefore qualify for different loans. Make sure you are considering all of your options and plan accordingly. Too often grad students do not consider the full scope of their repayment terms and conditions and soon find themselves responsible for large repayments all at one time. Don’t forget: if you borrowed as an undergrad and pushed them into deferment, those will be added to your graduate loans and the entire amount will go into repayment upon graduation.

If you decide (or need) to take out student loans to fund your graduate program: borrower beware! Make sure you truly understand the payment terms and crunch the numbers regarding how those payments jibe with your anticipated earnings and living costs. Also, it can be tempting for grad students to let loans foot the entire bill for their degree program and living expenses, but just because you can borrow above and beyond your tuition doesn’t mean you should. Ask yourself: do you really need that money now?

Maybe, you might have to pay it back:

• Forgiveness loans
• Tuition reimbursement

Some states and industries in need of master’s-level graduates have forgiveness loans and tuition reimbursement programs as well. But, per usual, make sure you know the terms of the aid. State or profession-based grants fall into the “maybe” category because if you choose to change professions or move out of the state, the grant may be rescinded—and it then becomes a loan that needs to be repaid. Your college financial aid and career services offices will be able to help you figure out your options. Check with your graduate school bursar on deferred payment options too.

Ask for help!

Finally, don’t be afraid to ask for help from the financial aid professionals at your university. They will be your best resource for funding and borrowing guidelines. Tell them your grad school plans and explore your options.

Keep in mind you’ll be that much more on your own when it comes to paying for grad school, so go into the process armed with knowledge, with eyes wide open, and with a solid financial plan to see you through to graduation.


Just when you thought you were done with the FAFSA… You still need to file a FAFSA every year as a grad student. This will unlock federal and state loans and grants you are eligible for. Only now, since you’re pursuing a master’s, doctoral, or professional degree master’s or doctorate program (MA, MBA, MD, JD, PhD, EdD, graduate certificate), you’re considered an independent student and no longer need to file with your parents, if you were before.

Also, in case you haven’t heard, starting in 2016 the FAFSA application timeline was bumped up to more closely coincide with the typical undergraduate application process. Students could file their FAFSA after October 1, 2016, for the 2017–2018 college year using tax info from 2015 (instead of waiting for January 1). So when you are ready to enroll in grad school, take note of FAFSA deadlines and be sure to fill out your FAFSA ASAP so you can get those first-come, first-served financial aid dollars!

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