Planning (and Paying) for Graduate School

Published on Author Bethany Sims

In 2015, the graduate school enrollment rate increased by 3.5%, with the highest levels of enrollment in mathematics, computer science and engineering. Earning an advanced degree can be a tremendous advantage professionally, but it comes at a price. Before you jump into a program, here are a few things to consider when researching and exploring graduate school.

Paying for grad school: scholarships, grants, and loans
Loans for professional and graduate degrees make up about 40% of the $1.3 trillion in outstanding student loan debt. While graduate students taking out loans may have a better understanding of the student loan system than the average undergrad, they are more likely to be paying for this education on their own. When researching schools, make sure to select a program you can afford or will be able to afford after you complete your degree.

Before reviewing student loan options, do the research on the free money available to you through your workplace and the federal government. Make sure you fill out the Free Application for Federal Student Aid (FAFSA) — it gives you access to grants as well as federal, state and school-specific financial aid. You can fill out the FASFA for the fall 2016 semester between now and June 1, but it’s best to complete it as early as possible.  Many employers offer a continuing education fund; make sure to review the benefits available to you by checking in with your HR department.

Those who attend part-time programs and continue working while in school have a significant advantage to getting out of debt faster. If possible, make payments while in school to keep your costs down and interest from accruing. Make sure you utilize all scholarships, grants and other assistance available before taking out loans to borrow as little as possible for your education. Due to their more flexible repayment terms and benefits, federal loans should be the next option to finance your education.  Private loans should only be used strategically and as a final option, not the first.

Know your loans
Financing options for grad school and undergrad are similar, except when it comes to the interest rates. At the time of this publishing, interest rates for federal loans are 5.84% for a Direct Unsubsidized Loan and 6.84% for a Direct PLUS Loan (which is also available to parents). If your loan is subsidized, the government pays interest on the loans during deferment. With unsubsidized loans, you are still responsible for the interest should you need to defer payments. Loans from private lenders vary because interest rates are often determined by the borrower’s credit.

While starting off with federal loans may be the best fit for many borrowers, the benefits offered (such as Income-Based Repayment) may not be something you need once you complete your degree. After graduation the main focus – besides celebrating your achievement – is to lower your interest rate.

Payment plans
Do your research on when you have to start paying back your loans and what federal programs you would like to take advantage of. Many who go back to grad school do so with the intention of changing careers. If you are going into nonprofit or public sector work, you may qualify for loan forgiveness after 10 years. The federal payback plan has several options that can be tied to your income if you are having trouble keeping up with payments. Review the options on the Student Aid government site.

If you have taken care of your credit and are earning a steady income, then refinancing is the best fit to help you get you out of debt faster, lower your interest rate, and save thousands on lifetime interest costs. Remember, through Purefy you can refinance both federal and private student loans once you have completed your degree. If you have any questions about the best solution for you please contact us.  We’re always happy to help.

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