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How Should I Finance My Grad School Degree? Your FAQ Answered 

Kathryn Tuggle  |  September 16, 2020

Note: This content is part of a paid partnership between Citizens Bank and Her Money Media.

More than nine in 10 graduate school students agree that the additional education is an investment in their future — that it’ll provide them with opportunities in their chosen field, as well as with increased earnings, according to a 2017 report from Sallie Mae. 

But those opportunities come at a cost. For the academic year 2016-17, the typical grad student spent an average of $24,812 on school, according to the report — and full-time students typically spent 50 percent more than part-time students. 

If you’re mulling over grad school but have questions on how to pay for it, look no further — we spoke with Christine Roberts, head of student lending at Citizens Bank, for the full rundown. 

How do I calculate what the “payoff” of my grad degree will be? 

The first step, says Roberts, is looking at the program’s full cost — and that includes the amount you’ll need to borrow versus the amount you already have. The next step: Do some research online to be able to compare your current income (without the degree) to your expected future income (with the degree). You can even chart out that future income in a spreadsheet, increasing it 3 to 10 percent per year depending on the average for that industry. 

Pay attention to how that expected future income grows year by year — and take note of how long it may take to offset what you paid for grad school (minus financial aid, scholarships and grants). Then do the math for yourself. If it takes, say, 20 years to pay it back, says Roberts, you’ll need to calculate whether you’ll have enough years in the workforce after that 20 years for the degree to continue to increase your income. Ideally, maybe it’d take two to three years instead, and the degree could help you grow your income for the rest of your career. 

Although no one can take an educational experience away from you, says Roberts, looking at it from a financial perspective, it’s likely best to choose something that allows you to grow your income exponentially while paying it off in a shorter amount of time. 

How do I pay for my graduate degree, and do student loans work much differently for grad school than they do for undergrad? 

Look into the pros and cons of full-time versus part-time enrollment, says Roberts; for the latter, you’re looking at reduced costs spread out over a longer period of time, and it can also mean less in out-of-pocket costs, since you can keep earning a part-time income. Attending full-time means a higher upfront cost of tuition plus potentially foregoing income for the amount of time you’re enrolled. Keep in mind, though, that certain schools don’t offer part-time enrollment. 

Roberts suggests doing an honest audit of your savings and deciding how much you’re willing to contribute toward a degree, as well as applying for merit-based aid, scholarships and more — the process is “really not too dissimilar” to undergrad, she says. Then there’s federal and private loans, including the grad PLUS loan, a “one-size-fits all” federal loan that allows grad students to take out funds up to the cost of attendance of their chosen school. 

How long will I have to pay off my grad school loans? 

It “truly depends,” says Roberts, who notes that the average amount of time it takes to pay off student loans is about seven years and grad school loans aren’t too dissimilar. Higher-cost grad schools for specific professions, like studying to become a doctor or lawyer, can take longer to pay off, but those careers also tend to mean higher incomes post-graduation. 

“The reality is it takes you as long as you want to pay it off,” says Roberts, and it all depends on your individual financial situation and the trade-offs you choose to make. 

Can grad school loans be refinanced? 

Yes, they can, with no penalty, says Roberts — if the market changes, you can refinance your loans again to get the lowest possible interest rate. It’s essentially the same as refinancing undergrad student loans, but it’s important to always remember to consider what you’re giving up if you’re “refinancing away from federal benefits,” says Roberts. 

One of those potential benefits is Public Service Loan Forgiveness (PSLF); if you’re in the public service sector (for instance, the Peace Corps, a not-for-profit organization or a teacher or doctor in an inner-city school), you should look into PSLF before deciding to refinance. You’d also be foregoing federal income-driven repayment (IDR) plans, so if you think there’s a chance you may struggle to make payments on your loans in the future, you may want to avoid refinancing. 

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