7 ways to pay for grad school

Shelly Gigante

By Shelly Gigante
Shelly Gigante specializes in personal finance issues. Her work has appeared in a variety of publications and news websites.
Posted on May 18, 2021

Earning an advanced degree can position you for a lifetime of higher earnings and potentially more leadership roles within your chosen profession. But those credentials on your resume don’t come cheap.

According to college research firm Peterson’s, the average annual tuition for graduate school is roughly $30,000 at public colleges and universities and roughly $40,000 at private schools.1

Total costs vary widely, however, depending on the school you attend and the type of degree you pursue — a two-year Master of Business Administration (MBA) or Master of Computer Science (MCS) degree generally costs more than a two-year Master of Education degree (M.Ed.), due partly to future earnings potential. A doctorate or professional degree to practice law (J.D.) or medicine (MD), work as a pharmacist (Pharm.D.), or teach and conduct research at the collegiate level (Ph.D.), which generally take three years or more to complete, typically cost more.

Law school students pay an average of about $51,000 per year, according to U.S. News and World Report, while the typical medical school student graduates with more than $150,000 in student loan debt, according to the American Medical Association.2 (Related: Why professionals owe more on student loans)

Luckily, there are multiple ways to pay for your education, some of which can potentially reduce your out-of-pocket costs significantly. They include:

Do you really need a higher degree?

The Bureau of Labor Statistics reports that advanced degree holders earn an average of $72,852 per year — 20 percent more than those with a bachelor’s degree alone ($60,996 annually).3

They are also more likely to find employment. Indeed, professions that typically require a master’s degree are projected to grow at a rate of 16.7 percent through 2026, far higher than the 7.4 projected growth rate for all other occupations.4

And then there are the benefits that are harder to quantify, including the opportunity to build your professional network, your competitive edge in the job market, and the workplace satisfaction often associated with jobs that require higher education.

But not all career paths benefit from a graduate degree or, for that matter, even a college degree.

Before you spend time and money going back to school, consider the potential return on investment.

The Economic Research Institute provides a salary tool that allows you to select a job, by levels of seniority, and project your average annual earnings 15 years into the future. This will enable you to produce a break point, or, the length of time it will take before your graduate degree pays off.

If you are in your 40s or 50s and planning to return to school, your time horizon may be too short to break even at all.

You should also research the position you hope to attain with a higher degree to be sure it aligns with your vision. Try shadowing someone who does the job you hope to have and ask them point blank whether having an advanced degree was helpful in their career. (Learn more: Making a career change: Understanding the cost implications)

Perhaps you wish to teach high school math. Depending on your state’s requirements, you may only need a bachelor’s degree and a teaching certificate to bring your dream to life, rather than a far more costly and time-consuming M.Ed. degree. Teach.com provides a breakdown of each state’s rules and regulations in this area.

Employer programs

Some employers, particularly larger companies and the U.S. government, will help pay for your graduate or professional degree.

More than half (54 percent) of employers offer tuition assistance programs for existing employees pursuing degrees, according to the Society for Human Resource Management. And 8 percent now offer student loan repayment assistance as a recruiting tool for new hires — a number that has doubled since 2018.5

Student Loan Hero lists 20 companies that help employees pay off their student loans by either contributing money toward their loans as taxable income or paying the loan servicer directly. Amounts vary from a low of $500 to up to $10,000 or more. The College Investor and NerdWallet provide similar lists.

Work-study grants

Federal work-study grants are also available to graduate students who demonstrate financial need on the Free Application for Federal Student Aid (FAFSA).

Work-study grants are provided in the form of paid internships during the academic term, community service (such as tutoring), research projects, or jobs either on or off campus.

The money students earn through the work-study program is paid for by both the government and the school they attend. Students typically receive an hourly wage as determined by the college and work from 12 to 20 hours per week.

By way of example, University of California Los Angeles' award amounts range from $5,000 to $15,000 per student per year, while the hourly rate for federal work-study jobs at University of North Carolina at Charlotte, where students are awarded up to $4,000 for the academic year, is at least $9 per hour.

Graduate teaching assistant jobs

Graduate school students can also slash their student loan bill by becoming a teaching assistant, a job that requires assisting faculty by teaching lower-level classes, developing teaching materials, preparing and giving exams, and grading exams or papers.

The amount you earn will be largely determined by geography and the caliber of the institution. The Bureau of Labor Statistics reports that the annual mean wage for graduate teaching assistants is $36,340 per year.6 The Glassdoor recruiting website suggests that the average base pay is closer to $26,000 per year.

Grants and scholarships

Graduate students should leave no stone unturned in the quest for financial assistance. That includes institutional aid that may be offered by their college or university.

Some schools offer their own loans, but many more offer need-based grants or merit-based scholarships. Grants and scholarships are always preferred because they need not be repaid.

The amount you may receive may be based on your household income, your academic achievement, and/or the size of the school’s endowment from donors.

It's also a good idea to apply for any private scholarships for which you may be eligible. Here again, your school may offer a list of those available. For example, Kean University in Union, New Jersey, offers more than 20 graduate school scholarships on its website.

A list of scholarships for graduate students is available through Fastweb, Unigo, SallieMae, and GoGrad

Just be sure that you read through the terms of any award you may receive, as it may require you to maintain a minimum GPA and may only be available for the first year.

Loan forgiveness and professional grants

Depending on your career, you may also be eligible for loan forgiveness.

For example, those who work for the federal, state, local, or tribal government or a not-for-profit organization may qualify for Public Service Loan Forgiveness, which forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a repayment plan while working full-time for a qualifying employer.

Students pursuing a teaching degree who meet academic requirements and agree to teach for at least four years in a district that serves low-income families (among other requirements) may also be eligible for the Teacher Education Assistance for College and Higher Education (TEACH) Grant. The program provides grants of up to $4,000 per year to students as they complete their coursework.

The most common types of financial aid for graduate school include teaching and research assistantships, employer-paid educational assistance—especially for MBAs—fellowships, TEACH Grants, and education loans, plus loan forgiveness like Public Service Loan Forgiveness,” said Mark Kantrowitz, college planning professional and author of “How to Appeal for More College Financial Aid.”

Online, accelerated, and part-time programs

You can potentially eliminate the opportunity cost of being out of the workforce longer by staying employed and earning your advanced degree online, or through part-time programs. Many colleges and universities offer such flexibility, which may permit better work-life balance, especially for young parents.

But be aware that it may take longer (five years or more) to earn your degree depending on how many credits you take each semester. That may negate some of the savings when you factor in the additional years you would be earning a lower salary with a lesser degree.

“Married couples might consider trading off, with one working while the other studies, then switching after the degree is attained,” said Kantrowitz.

Recognizing that time spent learning equals lost earnings, a number of colleges are also now offering an accelerated track to get students out the door faster. Some, like Fordham University in New York City, invite eligible undergraduate students to earn their undergraduate and law degrees a year early, while Pepperdine University in Malibu, California, offers a 12- or 15-month MBA to high-achieving undergraduate students.

The University of Miami in Coral Gables, Florida, similarly offers five-year combined undergraduate and master’s degrees in biology, chemistry, computer science, or history. Its accelerated MBA program, which is open to students who have already earned an undergraduate degree, can be completed in seven months.

Student loans

If you need to borrow money to pay for an advanced degree—and most students do—you should start by filling out the FAFSA. The two most common federal loans for which you may be eligible are the Stafford Loan and the Grad DirectPLUS loans.

With a Stafford loan, you can borrow up to $20,500 per year, with an aggregate limit of $138,500 for graduate students. That includes all federal loans you received for undergraduate study. Stafford loans have a fixed interest rate set by the federal government. (Related: Paying for college with Direct student loans)

Grad DirectPLUS loans are also fixed-interest student loans funded by the federal government that specifically provide financial assistance to graduate and professional degree students. The amount you may borrow is limited to the total cost of your education, but you must be enrolled at least part-time. You also need a good credit score to qualify. You can visit StudentAid.gov to apply for the Graduate PLUS loan after you complete the FAFSA.

There are private loans, as well, of course. Always compare the terms of your loans, including interest rates and the timeline for when initial payments must begin.

Conclusion

An advanced degree can pay big dividends, but it can also cost a pretty penny. As you consider your next foray into the hallowed halls of academia, be sure that you understand the potential return on investment and explore all avenues to cut your student loans down to size.

Discover more from MassMutual…

6 ways to cut college costs in half

A primer on college financial aid

Need financial advice? Contact us

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Peterson’s, “Is the Cost of a Graduate Degree Worth It?” Jan. 9, 2018.

American Medical Association, “How much can you save by staying in-state for medical school?” June 30, 2020.

Bureau of Labor Statistics, “Measuring the Value of Education,” April 2018.

Bureau of Labor Statistics, “Occupational Employment Projections Through the Perspective of Education and Training,” January 2019.

Society for Human Resource Management, “2019 Employee Benefits Survey,” April 2019.

Bureau of Labor Statistics, “Occupational Employment and Wage Statistics, May 2018.”

The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.