How to Financially Prepare For Grad School


Deciding to apply for and attend graduate school can be an exciting and emotional undertaking. You’re balancing both the excitement of a new beginning (and another few years living the student lifestyle) as well as the fear of making such a big time and financial commitment. Doing a little work up front can help you head into grad school prepared for the expense and can help make the transition back into the post-graduation world that much easier. Read on for four things you should do to financially prepare yourself for graduate school.

1. Estimate the cost/benefit of your program
​Basing the decision of which school to attend solely on the cost is not always the best idea. To give you a better perspective of whether the cost of a program makes sense, try doing a cost/benefit analysis of each program. To do this, examine the average salaries of students that have graduated from the program and compared them to the cost of the program. For example: Let’s say program one is a two-year program that costs $60,000 to attend and the average salaries upon graduation are $90,000. Program two costs less at $50,000 to attend, but the average salaries upon graduation are significantly lower, at $60,000. Though program two costs less, over the long run the ROI of program one may justify the higher cost.

And don’t forget to factor in the cost of living in different cities. If you’re comparing two schools, one in New York City and one in a rural, cheaper location, make sure you include the cost of living in your ROI calculation. Everything from rent, transportation, and food will be markedly different in these cities. The school will hopefully provide an estimate of cost of living expenses, but do your due diligence with a little of your own research. Take a look at this cost of living calculator to compare the cost difference between two cities.

2. Don’t leave money on the table
It may have felt like there were scholarships for everything when you were applying to undergraduate programs. When you’re looking at graduate programs it may seem like the scholarship options are few and far between. That’s not necessarily true, but you need to adjust your search process.

The first place to begin inquiring about scholarships is through the school you are applying to. They often have scholarships or fellowships that they award automatically through the application process or that are awarded with just a little extra effort, like writing an essay to explain why you are the right recipient for the award.

Next, you should look at awards or programs that may be related to your career choice after graduation. If you are looking toward a job in the public sector, there are quite a few grants or loan forgiveness programs that can help ease the cost of your education. Do a search for federal grants related to your program, public scholarships related to different public service fields, and ask the schools you are applying to for information related to any public service loan forgiveness programs they participate in.

3. Understand your loan options
Most graduate students rely on Federal or private loans to help pay for tuition and living expenses while they are in school. While these loans are fairly easy to apply for and receive, you want to be sure you understand the terms of your loan before you borrow. Key factors to look for include: term length, maximum amount you can borrow, interest rate, and whether it is subsidized.

Most Federal loans default to a 10-year term when you initially borrow the money, meaning that you will need to repay the loans in the 10 years following graduation. With the Federal Direct loan you can borrow a max of $20,500 per year and the current loan rate is 5.84%. Any additional money that you need to borrow to meet the cost of your program can be financed through the Federal Direct PLUS loan and the current rate is 6.84%. Payments on these loans won’t start until 6 months after graduation from your program. You can also defer the start of your payment if you are unable to find work after graduation. Both of these loans are unsubsidized meaning that they will accrue interest while you are in school. So even though you aren’t paying monthly your loan is accruing interest, which will ultimately lead to you paying off a larger amount once you graduate.

If you decide to forgo Federal loans and use private loans instead, be sure to understand when repayment will begin and what protections you have in case it takes you some time after graduation to find a job.

For options on what to do with your student loan once you graduate, be sure to read our article How to Go About Repaying Your Student Loans.

4. Live like a student before you’re a student
Before heading to grad school I received the advice to live like a student while in school to avoid needing to live like a student after school. I think this can actually go one step further and you should start living like a student as soon as you can, ideally before you get to school.  If you’ve been working a full time job for a while before applying to grad school, it can be hard to remember what it was like to really stretch your last $20 as far as it would go. Living like a student before school can help you save up some extra money for school and make the transition to being a penny-pinching student easier.

Look at your budget and see where you no longer need to be spending money. If you’ve been spending money on work clothes, make that one of the first things cut from your budget. Take a look at your cell phone bill and other utilities to see if you can cancel or negotiate a lower plan. And try swapping expensive nights out with friends for more low-key, budget friendly evenings. It may seem hard to make these cuts now, but adjusting your lifestyle and saving early will hopefully help keep you from borrowing too much or living a lifestyle you can’t afford while in school.

If you think grad school is in your future, what are you doing to prepare? Share your tips in the comments below!


Photography by Stoffer Photography for The Everygirl