Graduate School Costs & Options
February 20, 2010
Graduate school costs are an expense that’s tough to afford. If you need additional skills or a master’s degree to keep your job or advance at work, how can you afford to pay for grad school?
Costs & Benefits of Graduate School
U.S. News & World Report looked at some of the best graduate schools and found that today’s average master’s degree holder earns an average annual salary of $52,000 compared to $42,000 for someone with an undergraduate degree. For those who’ve earned professional degrees such as law or medicine they can earn an average of about $82,000.
Yet costs can vary widely among U.S. graduate schools. Some average a few thousand dollars a semester in tuition – not cheap, but doable for many working people. However, Business Week estimated last December that the average tuition for a two-year MBA program now tops $60,000 – that doesn’t include room, board or other fees. So for top graduate schools in many fields – not just business – the whole graduate school bill can easily top $100,000.
Does Graduate School Make Sense for You?
No doubt about it, graduate school is certainly a big commitment. It’s not just expensive, it also takes a big chunk of your time. When I went back to school to get a Master’s degree I took night classes since I worked all day. Most nights I wasn’t in class I spent doing homework and often worked over the weekends as well. Before you decide to take on the expense and work load of graduate school here are some questions to consider:
1. Have I researched my career field fully to determine whether a graduate degree in this subject will improve my earnings and professional advancement? If I have significant experience in my chosen field, do I really need the degree?
2. How quickly do graduates from my school of choice find employment and what is the average opening salary in my chosen field?
3. Do I have the time and focus to attend school while I’m working, and have I set a reasonable deadline to graduate? Will it place an burden on my family, career or social life?
Dealing with the Cost of Graduate School
If you’ve already decided the school or schools you’ll apply to, then the next step is to determine how you’ll whittle down what you’ll spend to get that diploma. One of the first steps in that process is to evaluate your total financial picture. Many early and mid-career students have additional expenses to consider, not the least of which includes family. Here are some ways that you can reduce the cost of graduate school.
Investigate endowments: A university’s endowment is its nest egg – a pile of investment dollars that produce investment income going to a variety of purposes. One of those purposes is grants and scholarships, the most attractive form of college aid because students don’t have to pay that assistance back as they would a loan.
Check on fellowships and assistantships: Depending on the advanced degree you’re going for, you might be able to fund your education through fellowships or assistantships. Fellowships are a sum of money awarded to promising students that can go toward paying tuition and room and board. Generally, they are awarded on the basis of merit and don’t have a work requirement.
Assistantships are a bit like a prestigious work-study program. Students who have a promising future are awarded a stipend or salary based on 10-20 hours a week of helping professors grade papers, conduct research, teach classes or supervise lab or workshop courses. Of course, any student considering these options also needs to consider whether they can support the workload while excelling in class.
Borrow smart: Most undergraduates exit college with debt in excess of $20,000, so without a pile of savings built up from their careers, most grad students end up borrowing heavily. The National Center for Education Statistics reports that based on 2004 data, 73 percent of all graduate students received some form of financial aid with an average amount of $15,100.
Generally it’s smart to tap all government-sponsored lending programs before turning to private borrowings. Stafford loans are generally the cheapest way to go with lifetime average. Subsidized lending rates for the 2009-2010 school year are currently at 5.6 percent (the unsubsidized rate is 6.8 percent), and their lifetime borrowing limits are at $138,500 for most degree programs and up to $224,000 for health professionals who spend the most on their education.
Check your qualifications for tax credits: Recent economic stimulus legislation has loosened up more tax benefits for new and returning students. The new American Opportunity Credit allows a rebate of up to $2,500 for each qualifying student in a family for the first four years of college.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less or $160,000 for married taxpayers. This replaces the $2,000 Hope credit for the first two years of school and the Lifetime Learning credit that applies at a lower amount afterward.
Get your employer to pitch in: Take advantage of every educational break you can take before you leave your company. If they require you to stay in your job a certain amount of time after accepting that aid or attaining your degree, work that into your plan.
Check local scholarships and grants: See if there are sources of grants and scholarships not only in your community, but also within your industry. Go online and do a general search for such aid among local nonprofits and professional organizations.
Consider a functional degree. All sorts of colleges – even the nation’s most prestigious schools – are considering abbreviated graduate and post-graduate programs that give students exactly the amount of education to upgrade their skills and head back into the workforce. In other words, if one year of college will do, why pay for two or more?
Get that PhD: If you’re in a field where a Ph.D means something – better job, more money, or both, then go for it because funding options might actually be more plentiful. Colleges want the best possible students in their Ph.D programs and load on tuition and living benefits to make sure that they choose their program and more important, that they complete those degrees.
This article on graduate school costs and options was produced in association with the Financial Planning Association (FPA), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.
[...] Graduate School Costs & Options – I spent some time trying to get an MBA a number of years ago, but in the end the costs began to outweigh the benefits. Choosing graduate school isn’t a decision to be taken lightly so it pays to understand the costs and options. [...]
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[...] Graduate School Costs & Options [...]
[...] there were a few more that span a number of topics such as kids and money, marriage and money, paying for graduate school, and a credit card scare that left my heart [...]
[...] Graduate School Costs & Options – I spent some time trying to get an MBA a number of years ago, but in the end the costs began to outweigh the benefits. Choosing graduate school isn’t a decision to be taken lightly so it pays to understand the costs and options. [...]