7 Ways Paying for Grad School Is Different Than Paying for Undergrad

 July 27, 2020
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Depending on the location and length of your program, undergrad vs. grad school costs might not be as much as you’d expect. According to the College Board, the average public master’s grad student spent just $260 more on tuition than the typical undergrad for the 2019-2020 school year.

However, paying for graduate school isn’t the same as paying for college — your experience can vary. Here are seven reasons why it’s different, along with some other factors to consider:

  1. You’re now seen as financially independent
  2. Fewer federal grant opportunities
  3. Better positioning for scholarships
  4. More work opportunities on and off campus
  5. Bigger borrowing limits
  6. Higher federal student loan interest rates
  7. Lesser need for a private student loan cosigner


1. You’re now seen as financially independent

As an undergrad, you might remember fetching your parents’ financial information to complete the Free Application for Federal Student Aid (FAFSA). After all, you were a dependent on their tax return and in the eyes of the Department of Education (ED).

However, now that you have a degree under your belt, ED sees you as financially independent. This time around, you’ll supply your own tax return for the FAFSA. Your parents could still claim you as a dependent on their tax return, though — ED and the IRS look at dependency status differently.

The FAFSA will dictate how much financial aid you can receive. But if you have a lower income than your parents, being on your own in ED’s eyes could mean more need-based aid.

2. Fewer federal grant opportunities

Grad students aren’t eligible for every type of need-based aid from the federal government. You’ll find, for example, that the Department of Education usually reserves Pell Grants for undergraduates, and the same can be said for Federal Supplemental Educational Opportunity Grants.

You could receive a Pell Grant, however, if you’re enrolled in a teacher certification program. Likewise, future teachers could be eligible for the government’s Teacher Education Assistance for College and Higher Education (TEACH) Grant. To receive a TEACH Grant, you must agree to work for at least four years serving students in high-need fields or low-income communities.

Being a graduate student could pay dividends when you apply for state-based grants. Some states offer grants specifically for grad students: The Arkansas Health Education Grant, for example, offers thousands of dollars in aid to aspiring medical professionals.

3. Better positioning for scholarships

As a high school senior or undergraduate paying for college, you might’ve struggled to stand out on scholarship applications. Now that you have a more defined career path, you could have an easier time convincing scholarship committees that your education is a worthy investment.

Look to professional organizations in your field that might be awarding gift aid. For example, if you’re seeking a master’s degree in journalism, you might try your hand at the Society of Professional Journalists’ Terry Harper Memorial Scholarship. Highlighting the focus of your degree and how you plan to use it could go a long way.

Online search engines are also among great resources for grad school scholarships. If you’re zeroing in on merit-based fellowships, you might review search results on a site like ProFellow.

4. More work opportunities on and off campus

One piece of federal student aid that doesn’t go away when you become a graduate student is the Federal Work-Study Program. If your FAFSA shows you have a proven financial need, you could find part-time on-campus work through the program.

As a grad student, you might score higher-paying or more rewarding job opportunities. If you haven’t already chosen a school, search for those that offer tuition waivers to employees. You can do this by contacting a school’s financial aid office.

Your job options during grad school can include an assistantship, which typically involves working alongside a faculty member. You could find yourself conducting research for a professor or substitute teaching their class.

If you’ve already turned your bachelor’s degree into an off-campus job, you could ask your current employer if it’ll help pay for your grad school expenses. You can strengthen your case if the degree you’re seeking will make you a more valuable asset to your employer.

5. Bigger borrowing limits

If gift aid doesn’t fill the gap between your savings and your program’s cost of attendance, you have access to federal student loans.

In fact, you can borrow even more from the government. As an independent grad student, you could borrow up to $20,500 per year in Direct Unsubsidized Loans. Undergraduates paying for college, meanwhile, are limited to between $9,500 and $12,500 annually in Direct Loans.

In addition, now also have access to Direct PLUS Loans, which are available to grad students and the parents of undergrads. You can borrow up to the amount of your program’s cost of attendance.

The maximum amount you can borrow during your academic career increases from $57,500 (for undergraduates) to $138,500 (graduate or professional students). The latter amount includes what you borrowed for college — so that means if you took out $50,000 in federal loans for college, you have $88,500 left at your disposal.

But despite the increased allotment, you should only borrow the amount you need. As you learned in college, taking out a student loan means eventually having to pay it back with interest.

6. Higher federal student loan interest rates

Federal loan allotments are higher for graduate students — but interest rates are too.

The interest rate for a PLUS Loan is 5.30% for loans paid out between July 2020 and June 2021.

The rate for Direct Unsubsidized Loans, meanwhile, is 2.75% for undergraduates but 4.30% for graduate or professional students. That increase makes for a larger monthly payment when you’re done with school.

If you have $35,000 in loans at a 4.30% interest rate, for example, your payment would be $359, but with a 5.30% rate, that payment would balloon to $376, according to our student loan payment calculator. Over the 10 years of the Standard Repayment Plan, you’d pay $2,042 in additional interest.

Grad students also lose access to Direct Subsidized Loans, which are interest free while you’re enrolled at least half time. So if you rely on PLUS and Direct Unsubsidized Loans in grad school, interest will start to accrue on them as soon as they’re disbursed.

The longer your graduate program, the more interest you’ll pay over time — which could inspire some potential grad students to specifically seek out one-year programs.

7. Lesser need for a private student loan cosigner

You never needed a cosigner for a federal student loan when you were paying for college the first time around — and you won’t need one as a grad student unless you have an adverse credit history.

It’s possible to secure grad school loans with bad credit. For a PLUS Loan, for example, you’ll need an endorser who agrees to be responsible for repayment if you fall behind.

More likely, you’ve had time to improve your credit score now that you’re an older, wiser grad student. In that case, an endorser — or cosigner, for private student loans — might not be as necessary as it was when you were paying for college.

In fact, 92% of undergraduate loans had a cosigner during the 2019-2020 school year, according to MeasureOne. But only 63% of graduate student loans had a cosigner.

Remember that you could apply with a cosigner for a private loan, even if you don’t need one. Riding the creditworthy coattails of a parent or someone else could help you score a lower interest rate.

Undergrad vs. grad: Other differences

Other than the cost of grad school and how you’ll pay for it, you can expect several other differences between undergrad and grad school. Some of these include:


You’ll likely experience a significant difference in the curriculum in undergrad and grad school. For instance, undergrad classes usually cover more general topics, while grad school coursework may be more focused on a specialty. This is one of the reasons why it’s important to be sure you understand the curriculum and what it will cover before starting grad school.


Often, students with undergraduate degrees end up in completely different fields than they had planned. That’s because undergrad studies provide a great deal of flexibility in the career you choose. On the other hand, grad school is usually more career-focused, resulting in graduates who are considered experts in specific fields.


For many students, a major difference between undergrad and grad is the amount of work you find yourself doing outside of school. The grad school workload could be double or triple what you experienced in undergrad, so make sure you’re ready to hit the books.

Like paying for college, grad school won’t be a piece of cake

Your graduate program’s cost of attendance might not dwarf your undergraduate’s. But you’ll soon learn that paying for it will require just as much effort.

Now that you know exactly how it can be different, you’ll be better prepared to pay for school a second time.

Like the first time, secure as many grants and scholarships as possible. That’ll help you focus on your career and worry less about debt once you graduate.

Christina Majaski contributed to this report.

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