Student Loans for Graduate School

After graduating from college, many people choose to continue their education through a graduate program. Some do it to become more competitive in the job market. Others go to graduate school as a result of a change in their personal interests or situation and use it as a way to break into a new field. Some are hoping to use graduate school as an opportunity to get promoted and move into a higher pay grade at work.

Regardless of why you want to go to graduate school, the how can be decidedly more complex. Grad school is expensive. Even if you don’t have any undergraduate debt, the financial implications can certainly give you pause to take out an education loan to cover your costs. You can quickly reach the point that you might wonder if grad school is even worth it.

Fortunately, you have options. Not only can grad school make sense from an overall financial perspective, but there are ways to make it work without being overly burdened by debt. The key is to ask yourself some key questions as you consider whether or not to go to graduate school, and which one to attend.

“Should I Go to Grad School?”: Breaking Things Down

Similar to the decision to go to college, there is no “one size fits all” answer to this question. Some people will be perfectly fine with a four-year degree given their career trajectory. In fact, graduate school may even hurt their career advancement, at least in the short-term. Others will need to go to grad school to achieve their career goals, particularly in certain fields such as law, medicine, or engineering.

It is important to answer the question about whether or not to go to graduate school by evaluating whether or not it will help take your career and life in the direction you want it to go. You’re not trying to figure out the objective “right choice” that works for everyone. You need to determine the solution that works for you.

To do that, consider your answers to the following questions:

• What are your long-term career goals? If you’ve always wanted to be a doctor, for example, attending medical school isn’t a recommendation; it’s a requirement. It’s something that you have to do to achieve that goal. If your goal is to open your own business, however, grad school suddenly becomes less necessary.
• Why do you want to go to grad school? Is it something you feel like you want to do, or is it something someone else told you that you had to do? Going to grad school because it will allow you to advance farther in your career is a good idea. Going to grad school solely because a family member told you to is not. And looking at graduate school as a way to postpone deciding what you want to pursue as a career is an expensive way to put off important life decisions.
• What will the impact be on your income? Is the income boost that grad school could generate large enough to counterbalance your new student loan debt? Essentially, do the benefits outweigh the costs?

Many people face that last question in situations where a graduate degree isn’t explicitly necessary for their field, but decide they want to go anyway. An MBA, for example, could potentially bring you into a new pay grade at work. This can help you pay off your loans more comfortably, and perhaps much faster. In that case, the investment in your education would probably be worth it.

In thinking through whether or not to take on debt to go to graduate school, you need to think through some other questions:

• How much debt did you incur from your undergraduate degree?
• What type of degree did you obtain?
• Can you pay off even more debt on top of what you have already borrowed for your undergraduate degree in your chosen field?

In short, the decision to go to grad school doesn’t make sense when, in the long run, what you get out of it is less than what you need to invest to go in the first place (either monetarily or in some other way such as personal happiness). Some people already have a sizable amount of debt from their undergraduate education, AND graduate school won’t positively impact their income. In that case, it’s probably not a great idea unless there is some other benefit to getting an advanced degree.

“How Do I Pay for Grad School?”

If you do want to go to grad school, there are a number of ways to pay for it. These include:

• Savings. Any financial savings that you have which you can put towards graduate school. If a scholarship allowed you to not dip into your savings as much as you expected during undergraduate studies, now is the time to put that money to good use.
• Scholarships. Use this LendKey resource to find scholarships related to your career.
• Fellowships. Because many fellowships are paid, they allow students to build professional credentials without having to take out further loans.
• Federal Financial Aid. Make sure you fill out your FAFSA form to see what resources are available to you.
• Private Student Loans. If federal student loans alone are not an option, look into getting a private student loan. While private lenders will consider your credit, you may be able to cover the full cost of your graduate school tuition with a private student loan.

“I Think I Need to Take Out Student Loans”

For many people, taking out student loans isn’t just the easiest way to pay for graduate school, but it can also be the most practical.

• Federal student loans for graduate students. Remember that FAFSA itself is not a loan. However, it will help determine what federal and state financial aid programs you might be eligible for. As a bonus, this may help you find scholarships and grant opportunities, too. Be sure to pay attention to the list of federal, college, and state deadlines on the FAFSA website.
• Private student loans for graduate students. Private student loans are a great way to fill gaps that may exist in your other sources of funding. You get them via banks, credit unions, and similar sources and you can apply at any time of the year.

A major advantage of federal loans is that they don’t require a credit check. The only exception to this is a Parent PLUS loan. You will get the same rates and consideration as anyone else.
It’s important to note, however, that unlike undergraduate Federal loans, subsidized loans are not actually an option for graduate school. They’ll accrue interest while you’re in school (unless you pay interest each month), resulting in a higher overall level of debt by the time you start repayment. Likewise, there is a cap on Federal direct unsubsidized loans that you’ll have to manage. If you’re going to graduate some other type of professional school, you can borrow up to $20,500 per year in Federal direct unsubsidized loans. Overall, you’re allowed to take out up to $138,500 in Federal loans – but this total A) includes your undergraduate debt, and B) can not exceed more than $65,500 in direct subsidized loans left over from your undergraduate degree.

If you have a high credit score, you may secure better interest rates through private student loans. Even if you didn’t consider private loans to be an option for your undergraduate education, if you’ve developed a good credit history it might be a better fit for your graduate school financing needs. Now that you’re older and have had more time to build credit, your credit score may help you in ways you have yet to realize.

Private loans, however, may require you to begin repayment while you are still in school. Most federal loans don’t require you to begin paying them back until you’ve graduated. However, this may be helpful for you in the long term, and in-school payments are typically lower. Making payments while you’re still in school can be a great way to lower your debt and start you out in a better position once you graduate, and can also potentially help your credit score if you make on-time payments.

As was true with your undergraduate education, you’ll also want to explore opportunities that mitigate the need for student loans in the first place. If you have multiple graduate schools all offering you scholarships, it makes financial sense to choose the school offering you the most money.

Likewise, you could choose a less expensive school, so long as it doesn’t negatively impact your career prospects. You could also explore paid internship opportunities and fellowships which can lower your costs. Any step you can take that allows you to earn professional credentials without actually paying for it could be a step worth taking.

The Road to Higher Education Goes On

In the end, it’s important to remember that graduate school is an individual choice – and a highly personal one. Depending on your current situation and your future goals, graduate school may not be for you. Countless people have managed to forge fulfilling, successful careers without an additional degree.

But if you have concluded that graduate school will be well worth it for your career goals and that it is financially viable, it’s important to move forward as responsibly as possible. This extends to the steps you take to secure the required funds.

At LendKey, our partner lenders are proud to offer private student loans with both fixed and variable interest rates to graduate students. There are no application fees and you potentially may not even need a co-signer – although having someone sign with you could help you secure a better rate. They’re easy to apply for and even easier to manage, all in the name of allowing you to achieve your dreams of higher education in a cost-effective way.

If you’d like to learn more about the financial implications of going to graduate school, or if you have any additional questions about our private student loans – contact LendKey today.