How to Pay for Grad School: 8 Ways to Finance Your Master’s Degree

Trying to decide whether to pursue that master’s degree? It’s a tough decision. Grad school requires a major investment of your time and your money, but it’s also rewarding to gain expertise in a subject you love. You might be surprised to learn that the investment pays for itself: According to the U.S. Bureau of Labor Statistics, people with master’s degrees earn at least $12,000 more per year than those with bachelor’s degrees. However, you have to get the degree first, and Sallie Mae reports that 77% of the costs for graduate school are covered by grad students themselves.

So, what are the best options to pay for an advanced degree? We’ve got some ideas ranging from the traditional to a bit more creative. This guide breaks down the costs of grad school, details eight funding sources, and offers a few nontraditional ways to pay for your master’s degree. Keep reading.

While graduate school costs vary depending on whether you’re attending a private or public institution, the cost of living, and other expenses, the reality is that grad school is expensive. In fact, 57.8 percent of graduate students receive some form of financial aid to help pay for their continued education, according to a 2017-18 National Postsecondary Student Aid Study.

Let’s dive deeper into average tuition costs, and the types of financial aid graduate students receive. This data gives you a general idea of what you’ll need to finance a master’s or doctoral degree, but reach out to your potential graduate schools to find more detailed information to finalize your decision.

Source: 2017-18 National Postsecondary Student Aid Study

While it’s pricey, earning a master’s degree doesn’t have to break the bank. Choosing a school that matches your quality standards and finances is a great place to start. Do your research and allow yourself time to save and plan your funding options. If cost is the major factor holding you back from going to graduate school, read on to find out how you can pay for your degree.

Start with what you’ve got: Look to your savings or earnings to help fund your education and reduce the amount of outside aid needed.

• 529 Savings Account: Got some money left over in a 529 plan? This is the perfect opportunity to put it to good use. Investing in your education early allows more time for you to reap the benefits.
• Personal Savings Account: You also can pull from your personal savings account to help fund your education. Once you’ve completed the degree, prioritize refunding your savings account with the extra cash you’re earning. That said, don’t defund your emergency account; even in graduate school, you could need that to fall back on. But it makes sense to delay other major purchases—cars, vacations, major technology purchases—for a few years.
• Working Through School: If you just finished your undergraduate degree and haven’t built up any savings yet, consider getting a full-time job to help pay for graduate school and avoid more loans. According to Sallie Mae, on average, 24% of the cost of grad school is paid for by a student’s earnings. Look at your monthly budget and see where to cut extra expenses to increase that percentage. Subscriptions and membership fees are a great place to start; once you start your graduate program, you won’t have as much time to use these anyway. As you size up your budget, add grad school as a category to help you plan and save for it.

Scholarships and grants are the most common form of financial aid. Be persistent in your search, and you can land a large amount of money you don’t have to pay back.

• Scholarships: Our scholarship page is the first place to check. You’ll find more than 60 scholarships you can look through and apply for. Next, check for university-specific scholarships. Many schools have foundations that collect scholarship money. You also can see if there are any scholarships for your specific area of study. Finally, look for other outside scholarships that you qualify for. Segment your search by looking for ones specific to your field of study, demographic category, or geographical region. Check out Peterson’s, Fastweb, Scholarships.com, Scholarship America, and Unigo, which offer databases of scholarship opportunities. Some of these require you to create a profile to access the information.
• Grants: Grants are like scholarships, except with a few strings attached. Those strings mostly mean that if you stop meeting the eligibility requirements for the grant, you may have to repay it. According to the Federal Student Aid website, you might have to repay a grant if you withdraw from school, reduce your enrollment hours, or receive aid that reduces your financial need. However, this isn’t usually the case. Grants break down into these four categories:

Federal Grants

These are needs-based and determined by the information reported on your Free Application for Federal Student Aid (more commonly known as the FAFSA).

State Grants

Distribution depends on your state. These may be needs-based or depend upon your field of study.

Institutional Grants:

Your university may offer grants based on demographics, need, or study area.

Organizational Grants

Professional organizations and businesses often provide grants to graduate students studying particular areas. Search for professional organizations for your field to get started.

Fellowships and assistantships sound similar, but they have some major differences:

• Fellowships are typically provided to students pursuing research or a specific course of study. Fellows are not university employees; the funding works more like a scholarship or grant, though specific deliverables may be expected. Because the money received is akin to a scholarship, it’s tax-free as long as the recipient is pursuing a degree and using the money to pay for it or related expenses. The university or an outside organization may fund fellowships. Those funded externally often only cover one year of study. Find fully funded fellowships and apply early, ideally around the same time you apply to the university.
• Assistantships are a specific type of work for the college or university. The assistant is paid a salary or stipend in compensation for work done. This work may relate to the specific degree the assistant is working toward but is typically more academic than a work-study job. Money received through an assistantship is taxable income. Many assistantships also come with a tuition reduction or waiver. Treat these applications like job applications and provide relevant work experience, references, and skills.

Getting a job with your school both generates income and helps you make connections. Consider these options:

• The federal work-study program can be a great choice if you don’t already have full-time employment. The program is needs-based and isn’t guaranteed from year to year. You’ll probably still have to find and apply for the job you want as your work-study job, which can be on- or off-campus. According to Federal Student Aid, work-study “emphasizes employment in civic education and work related to your course of study whenever possible.”
• If you don’t qualify for the federal work-study program, don’t sweat it. You can still work for your college or university and earn money to cover living expenses. Many school websites have specific pages for student employment. Your best starting place is to do a specific search for your university and student employment opportunities or job boards.

No matter which job you land, working on campus provides numerous benefits. First, you’ll reduce travel time and costs and can work between classes. Second, you’ll gain valuable work experience (especially important if you’re pursuing your degree right after undergrad). Third, your work schedule will frequently follow your school schedule, meaning you’ll be off on holidays and breaks. Finally, you’ll have a chance to network with other students and employees of the university.

If you’re already employed, check if your company offers tuition reimbursement for employees. If your employer doesn’t already have a program, ask anyway. You may be required to write a formal proposal to pitch the idea. Especially if your education relates to your current position or field, leverage how your degree will improve your work and the company. Remember, grad school prepares you for leadership roles and management positions—a great selling point to current employers.

Even if you’re not in a professional role, your employer may still offer help with tuition. Chick-Fil-A, Gap, and Home Depot are a few examples of companies offering employee tuition reimbursement programs. This can be a great way to narrow your job search if you’re looking for employment during grad school. Check out Scholly’s list of companies with excellent tuition reimbursement programs. The reimbursement available varies but is typically at or under $5,250 a year because of tax laws.

Employer requirements for these programs vary by company. Most expect you to maintain a certain level of academic achievement. Some require you to be a full-time employee. Many companies require you to work for them for a certain time after the tuition reimbursement is given. Check these terms carefully to ensure you can meet your company’s requirements

Federal loans available to graduate students fall into two categories—Direct Unsubsidized Loans and Direct PLUS Loans. Before diving into the specifics, it’s crucial to understand why federal loans are better than private loans. According to Federal Student Aid, these loans feature fixed interest rates typically lower than private loans. They also have repayment plans that are based on income. Some types of employment (such as teaching) may be eligible for loan forgiveness, and federal loans come with deferment options and interest rate reduction potential. Finally, one of the two federal loans available to grad students doesn’t require a credit check. Here’s the summary:

• Direct Unsubsidized Loans: Students can take out up to $20,500. You don’t need to demonstrate financial need, and you don’t need a credit check. You’ll pay interest on these loans even while in school; otherwise, the interest is added to the principal.
• Direct PLUS Loans: This loan is available for parents of undergrads and graduate or professional students. No demonstration of financial need is required, but a credit check is. Borrowers can take out as much as the cost of the student’s education minus other financial aid.

No matter which loan you choose, only borrow what you need. Try to reduce costs as much as possible by selecting an in-state school or a school with lower tuition costs. Work during school, at least enough to pay the interest on your loan. Also, plan for your increased salary to calculate how quickly you can repay the loan.

Banks and credit unions offer private loans. Unlike federal loans, the interest rate is not fixed and can vary throughout the length of the loan. These loans also provide fewer protections for borrowers. According to The New York Times, experts recommend that your total student debt be less than your expected first-year salary. It’s also recommended that you borrow as much as you can with federal government loans before taking out private loans. If you choose to take out private loans to cover the difference, read the fine print and terms closely and look out for these red flags:

• Look out for loans that offer more money than your cost of attendance. Limit yourself to only borrowing money you need for educational expenses. These loans must be paid back with interest, so don’t borrow more than you need.
• High-interest rates. In general, private loans have higher interest rates than federal loans. Ask about why the interest rate is so high; it may be because you or a co-signer have a poor credit score. Again, be sure to read the fine print and terms carefully so you understand how the interest rates vary throughout the life of the loan.
• Be wary of poor repayment options. If the repayment amount is too high, you won’t be able to afford it even after getting a job or a pay raise. Look closely at the repayment terms and look out for your best interests because the lender may not be.
• Student loan scams may offer you debt cancellation or refinancing for a fee. Lenders shouldn’t ask you to pay them to refinance your loans. They also shouldn’t charge you for advice. According to the NEA, it’s illegal for loan providers to charge you before they have provided services.

While this isn’t an obvious route to help pay your tuition, tax credits can help you save money come tax season. If you’re pursuing a graduate degree, you can claim a Lifetime Learning Credit on your taxes as long as you meet the criteria. According to the IRS, you must be enrolled in at least one academic period of study beginning during the tax year, be enrolled at an eligible institution, and work toward a degree or certificate. The IRS also places income limits on who is eligible for the credit. In 2020 the limit was $69,000 for those filing singly and $138,000 for those filing jointly. This credit is worth up to $2,000 and can be used to pay any taxes you owe, but it won’t be issued as a refund. Use the Interactive Tax Assistant to determine your eligibility for an education credit.

Beyond the traditional methods detailed above, numerous creative options exist to earn extra cash or save extra money for graduate school. If you can reduce your costs in optional budget areas, you’ll be able to earmark those funds to cover school expenses. Plus, you can generate money through nontraditional sources and reduce the amount you need to borrow. Check out the options below to see if any are a fit for your circumstances:

Textbooks are generally expensive. Save money by buying your textbooks from a textbook exchange, and when you’re done, sell them back. Some university bookstores already sell used books, but it’s worth price-comparing with online textbook exchanges to see where you’ll get the best value. If you’re studying in a highly technical field like IT or medicine, using a textbook exchange can provide significant savings. However, if your classes use a lot of open source textbooks, this may not be a great option.

You probably think of innovative new products when you think of crowdfunding; however, it’s also an option to pay for your school costs. An extensive social network can be a great way for friends and family to contribute small amounts of money to help fund your education. Numerous websites exist for crowdfunding; some are even specific to raising money for education expenses. Read the terms carefully and know how much of a cut the website takes from your donations.

The side hustle is a great way to earn a little extra cash to help fill in gaps in your education funding. You can fill in weekend hours with a gig job if you already work. You also can capitalize on the in-between hours that sometimes come with taking classes. This could mean driving for a ride service in between morning and afternoon classes, proofreading in between study sessions, or being a nanny during before- or after-school hours. Find a job that fits your skills and schedule. Obviously, this requires a time commitment, and time can be a precious commodity during grad school, so be honest with yourself about what is a healthy balance for you.

ROTC programs provide tuition, money for books, and a monthly stipend. Though often associated with undergraduate degrees, these programs can also be applied to graduate education. Students take military science prerequisites before they begin their degree classes. After graduation, students complete a service requirement and then continue military service or transition to the public or private sector. The Air Force, Army, and Navy offer ROTC programs, including graduate school options. A major plus of this option is that it’s a way to fund your graduate program fully. The biggest consideration is the length of the service agreement after graduation.

This will usually be done through the disability services office to provide notes to students who miss class or cannot take notes regularly. This works exceptionally well if you’re already a diligent note-taker and will be doing the work anyway.