Top 5 Financial Considerations to Make Before Graduate School
April 12, 2012


By Carlin Sack for

In today’s tough job market, many job hunters look to stand out from the sea of Bachelor’s degrees by pursuing a graduate degree. But before you jump into a new program, make sure to look into the financial implications of going to graduate school by following these five tips.

1)     Consider the shape of your undergraduate loans

Take a look at your monthly payments now and think about what they might be after graduate school. Would you have multiple lenders or loans after graduate school? If so, you may have to consider loan consolidation in the future, which would help to decrease your monthly payments but would also increase the overall amount of interest you would pay before paying off the loan.

2)     Fill out the FAFSA and consider these federal loan options

–        Federal Perkins Loans: These loans have the lowest interest rate, 5 percent, and are given to students with low income. Schools are the lenders (so there is no “shopping around” for lenders), although the loan is made through government funds. You can take a loan of up to $8,000 per year.

–        Stafford Loans: With Stafford Loans, you borrow directly from government. Stafford loans can be either be subsidized if you demonstrate financial need or unsubsidized if no need is demonstrated. Both subsidized and unsubsidized loans for graduate students have a 6.8% interest rate. There is a total loan limit of $20,500 for graduate students, with only $8,500 allowed to be from subsidized loans.

–        PLUS Loans: You can borrow a maximum of the cost of attendance for your school or program (minus other financial assistance they receive from Stafford or Perkins Loans). PLUS Loans have a fixed rate of 7.9% interest and usually give students 10 to 25 years to repay the loans.

3)     Look for financial help from employers

Although many employers do not fully cover the full cost of a graduate or professional program (especially during the recent economic downturn), some employers may offer other education benefits. If your employer does not have a policy regarding this, remind them that they are eligible for tax breaks for tuition reimbursement and offer to commit to the company for a certain number of years.

4)     See if you qualify for loan forgiveness

Loan forgiveness means that the federal government will sometimes cancel all or part of a student loan for those who work in the nonprofit or public sector. Graduates who work in needy communities in fields like education, law or healthcare typically receive loan forgiveness or, in some cases, a stipend from employers to repay loans.

5)     Do your research

Make sure to thoroughly check into the program’s reputation among employers, its rankings and accreditations, and its employment rates for graduates. Graduate schools often report this on their websites, as well as sites like U.S. News and World Report and Bloomberg BusinessWeek. Average salaries of graduates might also be important for you to know. After all, you have to receive a large enough income so you can pay back those student loans!

Carlin Sack writes for and attends Northwestern University’s Medill School of Journalism