Pay for Grad School
Payment & Funding Options
As an aspiring graduate student, you are likely aware that college can be expensive. Finding resources to pay for graduate school can be even more challenging than for undergraduate school, because there are fewer "free money" resources - like scholarships and grants - available for graduate students.
Here are some of your options:
Scholarships are financial aid gifts that do not need to be repaid. Many scholarships are merit-based and have distinct requirements. This should be the first source of funding graduate students should aim for. Searching for scholarships takes time and effort, so be sure to start the process as early as possible.
FEDERAL WORK STUDY
Federal Work Study provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses.
FEDERAL STUDENT LOANS
Many graduate students will need to use loan funding for their programs. The first choice in applying for student loans should be federal student loans.
The FAFSA (Free Application for Federal Student Aid) will determine your eligibility for federal student loans. Once approved, you will be eligible to borrow federal unsubsidized loans. Unsubsidized student loans accrue interest from the time they are first disbursed.
Subsidized student loans (on which the government pays the interest while the student is in school) and the Federal Pell Grant program are not available to students at the graduate/ professional level.
GRAD PLUS LOANS
If federal unsubsidized student loans are not enough for graduate students to meet your needs, you may be eligible to apply for a Federal Grad PLUS Loan. A Grad PLUS Loan is only available for graduate/professional students to meet financial needs up to the cost of attendance. These loans are credit and education-based, so eligibility varies from student to student.
Nonprofit and state-based organizations were founded to carry out an important mission — to provide students and families with free, expert resources to help plan, save, and pay for college. Nonprofit experts across the country are here to help. Find nonprofit loans here.
Understanding Financial Aid
Understanding your financial aid offer is important to making an informed decision about graduate school. Here are some terms you should know:
COST OF ATTENDANCE
The Cost of Attendance (COA) is the total cost (both direct and indirect) for one year in a college program. Some schools refer to this as the Student Budget or budget of some sort.The COA can include:
- Tuition and fees
- Books, equipment, and supplies
- Additional expenses
- Loan Fees
- Licensure or certification
- Dependent care
The COA is fluid and can change from year to year (or within each year). Be sure to stay in contact with the school’s financial aid office to plan for any changes that may occur.
STUDENT AID INDEX
The Student Aid Index (SAI) is calculated once an applicant completes the FAFSA. SAI is an eligibility formula that a university financial aid office uses to determine how much federal student aid the student would receive if the student enrolled at the institution. The formula is established by Congress in the statute and calculated every year by the Department of Education. It factors in an applicant's income, assets, benefits, and family size.
The SAI has more of a bearing on student aid eligibility at the undergraduate level, as Pell Grant and subsidized student loan amounts are determined by the formula. At the graduate level, the SAI primarily affects any need-based funds students may receive from scholarship-granting organizations or grants, as the federal student aid system does not make graduate students eligible for subsidized loans or the Pell Grant.
After determining the financial need, any gift aid awarded is applied to that amount. Gift aid consists of scholarships and grants, which are funding types that do not need to be paid back. This type of funding typically comes with prerequisites or continual eligibility maintenance, but because it does not need to be repaid, it is the first form of funding all students should seek out.
The COA minus any gift aid received equals the total net price. The net price is what the student will need to request in federal student loans and/or supplement through Federal Work Study (FWS) - if available and eligible. After all loans and FWS funds have been applied, if there remains any additional gap in funding, then that is the student’s final out-of-pocket cost (net cost).
FINANCIAL AID OFFER
The financial aid offer should start with the COA minus the EFC.
Next, the financial aid offer should list gift aid and the amounts applied to the COA. This will show what is remaining for loans and other sources to apply to the net price.
You can then see what loans and other sources were offered and can be applied to the net price. The offer lists what is available to you, but you have the right to refuse any loans you do not want to accept. This will result in a total net cost and show you if there are any additional out-of-pocket costs remaining.
The financial aid offer should list all dates the funds are expected to disburse as well as any potential refund dates.
Determining Best Loans
The U.S. Department of Education offers two types of loans for graduate students: Direct Unsubsidized Loans and Grad PLUS Loans. You must file a FAFSA to qualify for both federal loan programs, but there are some key differences between these programs that you should know before you borrow.
If you need to borrow to attend graduate school, federal Direct Unsubsidized Loans should always be your first choice. They have a low interest rate and many benefits for borrowers that are unmatched by any other loan program.
If you exhaust your federal Direct Unsubsidized Loans and still need to borrow more, you may also be offered federal Grad PLUS loans. At this point, you should also consider non-federal education loans.
The Grad PLUS loan has a higher interest rate and does not offer the same benefits as the federal Direct Unsubsidized Loan, so you may be able to save money by comparing the Grad PLUS loan with private education loans. One consideration when deciding whether to borrow a Grad PLUS loan or a private loan is whether you will apply for Public Service Loan Forgiveness.
PRIVATE EDUCATION LOANS
Be an informed borrower and look at more than one private loan option, comparing interest rates and terms to determine the best option for your personal circumstances.
Consider borrowing from a nonprofit or state-based organization. These organizations, which are guided by public-purpose missions, were founded solely to help students and families pay for college.
Find a nonprofit loan here.
You can trust that nonprofit organizations are working for you. They follow a set of strong consumer protections — called Guiding Principles — that affirm their commitment to working in your best interests, and not in the interests of shareholders.
Currently, all nonprofit and state-based lenders offer a fixed interest rate option, which is, in many cases, less than five percent, with low or no origination fees. Some lenders also offer variable rate options.
Many nonprofit loan programs also include borrower benefits, such as no prepayment penalties and interest rate reduction options, and some offer benefits for graduates that work in a critical field in the organization’s state. Several nonprofit programs also offer income-based repayment options.
Public Service Loan Forgiveness
As you think about borrowing to attend graduate school, the Public Service Loan Forgiveness (PSLF) program may be one consideration. PSLF forgives any remaining balance on federal student loans after 120 qualifying payments have been made. The payments do not need to be consecutive but must reach 120 in total. The borrower must also work full-time for a qualifying employer during the duration of the payments.
- For an employer to qualify, it must be one of these types:
- Government organizations at any level (federal, state, local, or tribal)
- Not-for-profit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code
- Other type of not-for-profit organization that is not taxexempt under Section 501(c)(3) of the Internal Revenue Code, if it provides certain types of qualifying public services
Federal Direct Student Loans (including PLUS) are eligible for the PSLF program. Federal Family Education Loans (FFEL) and Federal Perkins Loans do not qualify for the PSLF program, but may if consolidated into a Direct Consolidation Loan. Private student loans are not eligible for this program.
For more information about PSLF and the program requirements, including what types of payments qualify, visit Federal Student Aid.
Federal Tools and Resources
College Planning and Financial Wellness
Financial Path To Graduation: This tool from the Consumer Financial Protection Bureau can help you understand your financial aid offer, give you a plan for how to cover the additional costs, and help you decide what the next steps to take are.
Budgeting: This resource from Federal Student Aid helps teach you about budgeting and explains the benefits of managing your finances well.
College Scorecard: This resource from the Department of Education helps you research colleges, different programs, costs, admissions, and more.
Student Banking: This resource from the Consumer Financial Protection Bureau can help you make smart banking decisions and manage your money wisely.
MyMoney.Gov: This resource from the Treasury Department lays out five principles that serve as the building blocks for managing and growing your money, as well as overall financial wellness and provides additional tools and resources to help along the way.
Repaying Student Loans
Repay Student Debt: This tool from the Consumer Financial Protection Bureau provides information and advice for optimizing how you pay off your student loans based on some basic information about your situation.
Repaying Your Loans: This resource from Federal Student Aid reviews important terminology and explains the loan repayment process in depth.
Scams: This resource from the Consumer Financial Protection Bureau helps to explain common types of scams, what strategies scammers typically use, and how to best protect yourself.
Student Loan Simulator: This tool from Federal Student Aid helps you make decisions about your student loans, including finding a repayment plan that best fits your needs and goals and providing valuable information on whether to consolidate your loans or change repayment plans.