The decision to pursue a graduate degree is a significant investment in your future, one that can open doors to advanced career opportunities, increased earnings, and specialized expertise. However, the financial commitment required can be daunting. In a recent EAB survey of 6,000+ graduate students and adult learners, findings highlighted that financial assistance (scholarships and financial aid) were one of the most important factors when making an enrollment decision. Similarly, cost is the primary reasons survey participants indicated they choose not so continue their higher education. Graduate school is often more expensive than undergraduate studies, and while financial aid is available, navigating the options requires careful planning. In this guide, we’ll discuss key considerations when evaluating the cost of graduate school and exploring financial aid options, helping you make informed decisions to reduce the financial burden.

1. Understand the Total Cost of Attendance

The first step in planning for graduate school costs is understanding the total cost of attendance (COA) for each program you’re considering. The COA includes tuition and fees, but it also encompasses living expenses, books and materials, transportation, and health insurance. While tuition rates are typically listed on school websites, other expenses can vary widely based on the location, program format, and length of study.

Key Considerations for Total COA

  • Location: Living expenses will vary significantly depending on where the school is located. Urban areas typically have higher rent and transportation costs compared to rural areas.
  • Program Duration: Some programs, particularly in fields such as law or medicine, may require more time to complete, which means higher total costs.
  • Additional Fees: Schools often charge fees for labs, technology, student activities, and health services. These can add up and should be factored into your budget.
  • Cost of Materials: For certain fields, the cost of books, supplies, or specialized equipment can be substantial. Some programs may require you to buy specific tools or materials, so research what’s required in advance.

2. Types of Financial Aid for Graduate Students

Graduate students have access to several types of financial aid, though the options differ somewhat from those available to undergraduates. Here are the main types to consider:

Federal Financial Aid

The U.S. government offers financial aid for graduate students in the form of Direct Unsubsidized Loans and Direct PLUS Loans. To apply, you’ll need to complete the Free Application for Federal Student Aid (FAFSA), which determines your eligibility for federal aid.

  • Direct Unsubsidized Loans: These loans are not based on financial need, and all graduate students are eligible to apply. However, interest starts accruing immediately, so it’s important to factor in the interest costs.
  • Direct PLUS Loans: PLUS loans have higher interest rates and require a credit check, but they allow you to borrow up to the full cost of attendance (minus other financial aid received). Be cautious with PLUS loans, as their repayment terms can be challenging due to higher interest rates.

Considerations for Federal Loans

  • Interest Rates: Graduate students are subject to different interest rates compared to undergraduates. Check current rates and understand how interest accrues over time.
  • Loan Limits: Direct Unsubsidized Loans have annual and aggregate limits, so you may need to rely on other funding sources if your program is particularly costly.
  • Repayment Options: Federal loans offer income-driven repayment plans, which can help if your postgraduation income is lower than expected.

Scholarships and Grants

Scholarships and grants are highly desirable forms of aid because they don’t require repayment. Many institutions offer merit-based scholarships for graduate students, often awarded based on academic achievements, professional experience, or specialized skills. Some scholarships are field-specific, so it’s worthwhile to search for opportunities related to your area of study.

Good News About Scholarships and Grants: About 60% of graduate students receive some form of institutional financial aid—such as scholarships, grants, and assistantships—which can significantly reduce tuition costs (Council of Graduate Schools). Many programs, especially in high-demand fields, have expanded funding options to make graduate school more affordable.

Assistantships and Fellowships

Assistantships and fellowships provide funding in exchange for work or academic accomplishments. These can be valuable opportunities to gain hands-on experience while offsetting the cost of your education.

  • Teaching Assistantships (TAs): TAs support professors by leading discussions, grading, or helping students with coursework. In return, students often receive a stipend and tuition remission.
  • Research Assistantships (RAs): RAs work on faculty-led research projects, often gaining valuable experience in their field. Similar to TAs, these positions typically offer stipends and tuition coverage.
  • Fellowships: Fellowships are typically merit-based awards that do not require work in exchange. They can be highly competitive, but fellowships often cover tuition and provide a living stipend.

Considerations for Assistantships and Fellowships:

  • Time Commitment: Assistantships require a significant time commitment, so consider whether the workload is manageable alongside your studies.
  • Availability: Not all programs offer assistantships or fellowships, so inquire with your program to understand what’s available.

Note: Assistantships are especially common in certain fields. For instance, 73% of doctoral students and 43% of master’s students in STEM receive teaching or research assistantships (Council of Graduate Schools).

3. Employer Tuition Assistance Programs

For students who are employed, checking if your employer offers tuition reimbursement is worth considering. According to the Society for Human Resource Management (SHRM), about 50% of employers offer tuition reimbursement programs, providing funds to help cover education costs. These programs can make graduate school much more affordable, especially for those pursuing degrees that align with their career goals.

Good News About Employer Support: The IRS allows employers to provide up to $5,250 in tax-free tuition assistance per year, making this benefit even more valuable for employees (Society for Human Resource Management, SHRM).

4. Higher Earning Potential for Graduates

While taking on debt may seem risky, a graduate degree often leads to higher earnings that can make the investment worthwhile. Data from the U.S. Bureau of Labor Statistics (BLS) shows that individuals with a master’s degree earn a median annual salary of $80,000, compared to $68,000 for bachelor’s degree holders. This represents a 17.6% increase in median earnings for those with advanced degrees.

In some fields, the income boost is even more pronounced. For instance, STEM professionals with advanced degrees often see a salary increase of 20% or more compared to those with only a bachelor’s degree, making graduate education a potentially high-return investment (U.S. Bureau of Labor Statistics).

5. Loan Repayment and Forgiveness Options

When considering borrowing for graduate school, it’s essential to understand your future repayment options. Graduate school loans can add up quickly, so having a plan for repayment is critical.

  • Income-Driven Repayment Plans: Federal loans offer income-driven repayment (IDR) plans, which cap your monthly payments based on your income and family size. This can be helpful if your salary is low initially after graduation. Under these plans, monthly payments are typically capped at 10-15% of discretionary income (U.S. Department of Education).
  • Public Service Loan Forgiveness (PSLF): If you plan to work in a qualifying public service role, you may be eligible for loan forgiveness through the PSLF program after making 120 qualifying payments. Thousands of borrowers are currently on track for PSLF, and the program has increased access to forgiveness each year (U.S. Department of Education).

6. Budgeting and Financial Planning

A successful financial strategy for graduate school requires careful budgeting and financial planning. By understanding the true costs of graduate school and your financial aid options, you can make more informed decisions and reduce debt.

Tips for Budgeting

  • Calculate Monthly Expenses: Estimate your monthly living expenses based on the school’s location, and ensure your aid package or income will cover these costs.
  • Emergency Fund: It’s wise to set aside an emergency fund to cover unexpected expenses, such as medical bills or car repairs.
  • Part-Time Work: If your program allows, consider working part-time to supplement your income. Many graduate students work as freelancers or tutors or in other flexible roles that fit around their studies.

Conclusion: Making an Informed Decision

Affording graduate school requires a strategic approach to budgeting, researching financial aid options, and understanding long-term repayment commitments. By evaluating the total cost of attendance, considering different financial aid sources, and planning for repayment, you can make informed decisions that support your academic and career goals without overburdening your finances.

With multiple financial aid options available—including scholarships, assistantships, employer support, and income-driven repayment plans—prospective graduate students can feel optimistic about managing costs and reaping the long-term rewards of an advanced degree. Good luck on your journey to finding the financial support you need to pursue your dreams.