Lesson 4: Financing Graduate School

Students are often surprised by the cost of graduate school. Finances are a very important part of your school decision making process. And there are many items to consider when you are thinking about how to finance your professional or graduate school degree.

In this video, we're going to discuss some of these factors. We're going to cover-- sticker shock, the G.I. Bill, scholarships and fellowships, Grad PLUS loans, institutional loans, and leave you with the bottom line on the bottom line. Graduate school can be expensive. For example, the average yearly tuition for business school-- just the tuition-- is currently $60,000.

Many students may leave law or medical school with hundreds of thousands of dollars in debt, but you probably expected that, even if the number feels high. Frustratingly, graduate school expenses began well before you get your first tuition statement. Standardized tests, application fees, to say nothing of travel for campus visits and interviews can easily reach into the thousands of dollars. As you think about your graduate school options, make sure to do a cost benefit analysis with the average yearly salary for the career path that you're choosing. Perhaps, the benefits outweigh the costs, particularly, if a program fits well with your values, personal, and professional goals.

You may think that you've used all your G.I. Bill benefits, but it's worth taking a little time to double check. We tend to talk about G.I. Bill benefits in terms of years. You're offered-- assuming you earned 100% eligibility-- four years of benefits for your undergraduate study or three years of benefits toward graduate school.

But it's worth remembering that the VA does not calculate your time in school in years, but rather in days. You may discover that you have a few weeks of eligibility remaining on your G.I. Bill. And here's the kicker, if you have enough eligibility to begin a new term, many of your G.I. Bill benefits will continue until the very end of that term. So it's worth taking some time to check with the VA about your remaining benefits.

As an undergraduate, check with your fellowships office or career center to see if you may be eligible for postgraduate fellowship programs. There are many scholarship and fellowship programs like the Marshall Scholarship, Gates Cambridge Scholarship, among others that often help with graduate school funding. When you apply to graduate school programs, make sure that you give yourself enough time to apply for the many scholarship opportunities that may be unique to their programs. You may also find that certain programs, like many PhD programs provide full funding to their students, often with stipends for research and teaching.

Look into the various financing options through your programs and see what unique scholarships and funding opportunities may be available to you as an undergraduate for graduate school study. If you need to take out loans, which many graduate students do, a special kind of federally guaranteed Direct PLUS Loan, sometimes called a Grad PLUS Loan, is often available to graduate or professional students. You may take out a loan that covers up to the entire cost of attendance, as determined by your graduate program. And the loans often offer means-tested repayment plans.

So for example, your monthly repayment bill would be adjusted to your postgraduate income. It sounds like a good deal. But remember, that you can borrow a lot of money very quickly with this program. So if you are attending an expensive graduate program like an elite law school, for example, it could be possible to run up hundreds of thousands of dollars in debt. It may be a wise investment in the long-run, but it's a good idea to spend some time looking for grants and other awards that don't come with a bill at the end.

If federal loans are insufficient to cover your time in graduate school, you may consider an institutional loan. But beware, reaching for an option like this may be a signal that the school of your choice is unaffordable. Offered by the university, itself, institutional loans often do not offer the income-sensitive repayment options available from Grad PLUS loans. And their interest rates vary considerably. As with any loan, make sure you have a good sense of what you can afford before you sign for the loan.

Take a look at your budget and set up an appointment with your university's financial aid office if you have further questions. If you are currently an undergraduate student, you might be able to obtain in-person assistance. Even if you are going to attend graduate school elsewhere, your local financial services office will have plenty of good resources to help you find the right financing options to meet your goals.

And unlike a lender, your university's financial aid officers aren't trying to sell you a product. You can get knowledgeable advice without a cost to you. So finally, the bottom line on the bottom line-- graduate school can be expensive. But if you manage your finances, make, and stick to a plan, and ensure that the money you borrow is really necessary, you can turn the expense into an important investment in your future.