Should You Take Out College Loans for Grad School?

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Depending on your career goals, a master’s degree can open doors and accelerate your climb up the corporate ladder. It also can help you establish your professional reputation and earn more money.

However, graduate school is expensive. In fact, the average graduate of a Master of Arts program will walk away with a staggering $58,539 in student loan debt between undergraduate and graduate school.

Given the high cost of graduate school, it’s important to know that getting a master’s degree isn’t for everyone. Before you apply for college loans, consider whether graduate school is worth it and explore all your financial aid options before enrolling.

3 questions to ask before taking out college loans

Deciding whether to go to graduate school is a big decision with long-lasting consequences. Ask yourself these three questions before moving forward.

1. What is the cost of my degree?

Tuition at public graduate schools costs $30,000 per year on average, according to education resource Peterson’s, and tuition at private graduate schools costs $40,000 per year on average.

The actual cost of your graduate degree program depends on a range of factors, including your field of study, your location, and the school you choose.

Before enrolling, ask the admissions office how many people graduate on time. If most students need an additional semester or two, that could affect the overall cost of your degree.

2. How will a master’s degree affect my earning potential?

Although a master’s degree can boost your earning potential, a salary increase isn’t a guarantee. It’s wise to research salaries in your field and whether they increase with more education.

Sites such as PayScale and Glassdoor allow you to see what people in your region make and how much a graduate degree could affect your salary. By doing your homework, you might find out that a master’s degree doesn’t pay off enough to make your tuition bill worth it.

For example, a mechanical engineer with a bachelor’s degree working in New York City earns a median salary of $63,000. If that engineer gets a master’s degree, the salary jumps to $69,000.

By contrast, the median salary for a marketing manager who has a bachelor’s degree in New York City is $51,000. If that same person gets a master’s degree, the median salary increases to $54,000. That’s a difference of just $3,000, which might not be enough to cover the student loans you took out to pay for school.

3. What is the job outlook for my field?

Salary isn’t the only factor you should consider when evaluating your degree’s return on investment.

In some fields, it can be difficult to find a job at all, even with a master’s degree. The few positions that are open might pay well, but breaking into the industry and securing a job could be challenging. If it takes months to land a job, the time you spend unemployed might negate your degree’s value.

To find information on your chosen industry, check out the Federal Reserve Bank of New York’s report on the labor market for recent college grads. It outlines the unemployment rate, underemployment rate, median wage, and number of people with a graduate degree in every field.

5 types of financing available for grad students

If you’ve decided that graduate school is worth the investment but need help paying for it, make sure you explore all your options. There are five key sources of financing available.

1. Fellowships

Fellowships are merit-based grants that might cover the cost of tuition, room, board, and even textbooks. You can secure a fellowship from your school or a private organization. ProFellow is a database of fellowship opportunities nationwide. Use it to find opportunities relevant to you.

2. Work-study

If you qualify for a federal work-study program, you’ll work with your school to find a part-time job with a participating employer. You can use the money you earn to pay for a portion of your tuition while building up your resume.

3. Grants and scholarships

Grants and scholarships are the best forms of financial aid you can receive because you don’t have to pay them back. You can find grants and scholarships for graduate school by using resources such as Fastweb and GoGrad.

4. Federal student loans

If you’ve exhausted your other financial aid options, student loans are a good next step. Federal loans are a smart starting point, as they tend to offer lower interest rates and more generous repayment terms than private loans.

As a graduate student, you’re eligible for Direct PLUS Loans, which have an interest rate of 7.00% as of 2018. You’re eligible for a loan if you’re enrolled in school at least half time and don’t have an adverse credit history.

5. Private student loans

If you need more money after turning to federal loans, private student loans are another option. Private loans usually have higher interest rates than federal loans, and they don’t offer federal benefits like income-driven repayment plans. However, they can be a helpful tool you can use to complete your degree.

Financing your education

As you decide whether to take out college loans for a graduate school program, consider how your degree will affect your student loan debt, your chances of getting a job, and your earning potential. By asking yourself the tough questions now, you can ensure you’re making a strong investment in your future.

Need a student loan?

Here are our top student loan lenders of 2018!
LenderRates (APR)Eligibility 

1 = Citizens Disclaimer.

2 = CollegeAve Autopay Disclaimer: All rates shown include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.

3 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
3.54% -
12.07%
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Undergraduate, Graduate, and ParentsVisit CollegeAve
4.11% - 12.19%Undergraduate and GraduateVisit Ascent
4.00% - 11.85%*3Undergraduate and GraduateVisit SallieMae
2.93% -
9.67%
Undergraduate, Graduate, and ParentsVisit CommonBond
3.80% -
11.99%
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Undergraduate, Graduate, and ParentsVisit Citizens
4.53% - 9.69%Undergraduate and GraduateVisit LendKey
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.