Thinking about attending graduate school? Getting an advanced degree can be a great career move, but it may come with a hefty price tag. So you’ll need a plan to pay for school as well as your expenses. For many students, that means taking out loans. Even if you’re familiar with student loans from undergrad, you may be surprised to find that while there are similarities to undergraduate student loans, there are also some differences. Here are some things anyone considering loans for graduate school needs to know.

Grad school costs can make student debt snowball

Taking out loans for graduate school can really cause your student debt to grow. According to the website educationdata.org, the average undergraduate student loan debt is nearly $37,000. But for those holding master’s degrees, the average total student debt jumps to more than $71,000. For PhD holders, the total’s more than double that at nearly $160,000. These numbers illustrate why it’s so important to balance the costs and benefits of going to graduate school, search for as much free funding as possible, and if you take out loans, spend time searching for the absolute best loan for you.

Grad school federal loans aren’t subsidized

Unlike with loans for undergraduates, the government doesn’t offer need-based subsidized federal loans for graduate school. There are, however, federal loan options for grad school including Direct Unsubsidized Loans (currently capped at $20,500 per year) and Direct PLUS Loans (if your school participates in the program, which can cover the rest of your school costs).

Consider private student loans

Once you have figured out how much you need to borrow, shop around to determine the best lender for you. Be sure to consider and understand both your federal and private student loan options. In addition to comparing the interest rates and fees on loans, you'll want to know whether there's any flexibility in repayment. As with undergraduate student loans, you’ll need to undergo a credit check as part of the private loan application process. If you have a low credit score or don’t have credit history, you may benefit from applying with a creditworthy cosigner.

Fill out the FAFSA® to apply for federal loans

Just like with undergraduate loans, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA) as part of the application process for federal loans. Even if you don't think you'll qualify for or use federal aid, it’s still worth it to complete the form, since the FAFSA may be necessary for some scholarships or grants.

Smart planning can help you borrow less money for graduate school

Anything you can do to cut down on the amount you have to take out in loans will benefit your financial future. Here are just a few ways to whittle down that bill.

Use a tax-advantaged account to save

If you know that you’re definitely going to go to grad school in the future, put money aside in a 529 account. The money will grow tax-free, and you'll be able to withdraw it tax free for qualified educational expenses. (Keep in mind, however, that if you change your mind and decide not to go to school, you may incur a penalty to access those funds.) Consult a financial planner or tax advisor when comparing savings accounts.

Look into employer tuition reimbursement

Many employers will offer tuition reimbursement for all or some of employees' continuing education as part of their benefit package. Talk to your HR department to find out whether your company will contribute to the costs, and whether there are any strings attached. Some employers, for example, will require that you remain with the company for a year or two after receiving reimbursement, or require you to return the funds if you leave earlier than the designated time.

Look for free money

Since they don't need to be paid back, grants and scholarships are the best way to pay for graduate school. In addition to seeing if you qualify for merit scholarships or other grants from your school, see whether there are any scholarships available from industry trade groups or organizations in your local community. You can search 3 million scholarships worth more than $18 billion with the Discover® Student Loans Free Scholarship Search. No registration required.

Consider a teaching or research position or a fellowship

Schools may offer a stipend and reduced or free tuition to graduate students who help teach undergrad classes or work on research projects for the school. Some schools and external organizations also offer fellowships to graduate students that will cover the cost of their education in a particular field.


FAFSA® is a registered trademark of the US Department of Education and is not affiliated with Discover® Student Loans.

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