Getting a graduate degree can help you move up the company ladder, boost your salary, or switch to a different career. But going back to school can be costly. On average, students rack up $78,118 in student debt to pay for graduate school, according to the Education Data Initiative. That average reflects debt for all advanced degrees beyond the bachelor’s level, including master’s and doctoral degrees.
Many students who borrow money to pay for grad school already have debt from undergraduate studies. Including the average undergraduate student loan debt balance ($37,337), raises total average student debt for graduate students to $115.455.
Fortunately, there are ways to get a graduate degree without taking on a large amount of student loan debt. There are also a variety of payment plans that can make repaying grad school debt easier on your budget after you graduate. Here’s what you need to know about student loan debt for graduate school.
What Is the Average Graduate Student Loan Debt?
If you’re thinking about applying to graduate school, you may be wondering how much you’ll need to borrow to cover your costs and whether or not it will be worth it.
On average, students leave graduate school with a student loan debt balance of $78,118 (from grad school alone). How much debt students rack up going to grad school, however, can vary significantly depending on the type of degree they pursue and the kind of school they attend. A doctoral degree generally costs more than a masters, for example, while attending a public, non-profit university is typically cheaper than going to a private, for-profit college.
Here’s a closer look at the average graduate school debt balance for different degrees obtained at different types of institutions.
• Master’s degrees: The average total student loan debt balance is $83,651 ($64,950 is just from graduate school).
• Master’s degrees from public schools: The average total student loan debt balance is $69,057 ($54,699 is just from graduate school).
• Masters degrees from private schools: The average total student loan debt balance is $91,168 ($72,776 is just from graduate school).
• PhDs: The average total student debt balance is $134,797 ($127,521 is just from graduate school).
• PhDs from public schools: The average total student loan debt balance is $115,759 ($106,297 is just from graduate school).
• PhDs from private schools: The average total student loan debt balance is $199,175 ($183,508 is just from graduate school).
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Exploring Options to Finance Graduate School
Grad students can finance their education with federal student loans, private loans, or a mix of both. Here’s a closer look at the different types of loans available for graduate school.
Federal Loans
Graduate students can take out two different types of federal loans.
Direct Unsubsidized Loans
You can borrow up to $20,500 each year in Direct Unsubsidized Loans for graduate school, and eligibility is not based on financial need. The interest rate for Direct Unsubsidized Loans for graduate students for 2023-24 is 7.05%, plus an origination fee of 1.057%.
If you borrowed federal funds for your bachelor’s degree, you may be subject to a total federal funding limit of $138,000 in Direct Loans, including the amount of your undergraduate degree. Graduate PLUS (and Parent PLUS loans) are separate from this amount.
Direct PLUS Loans
If Direct Unsubsidized Loans aren’t enough to cover your attendance costs, you can next turn to Direct PLUS Loans, which have a higher interest rate. You can borrow up to the full cost of attendance for each year, which is set by your university and includes expected living costs for the town or city you’ll be studying in.
Eligibility is not based on financial need, but a credit check is required. Borrowers who have an adverse credit history must meet additional requirements to qualify. The interest rate for 2023-24 is 8.05%, plus a 4.228% origination fee.
Private Loans
Students can also take out private student loans for graduate school. Indeed, if you’re applying for grad school when you already have a well-established credit history, you may be able to get a lower interest rate from private lenders than from the federal government. This could save you a significant amount of money over time, and also help you get out of debt faster.
You’ll want to keep in mind, however, that the government offers significant protections that can make federal student loan debt easier to manage, such as income-driven repayment plans and student loan forgiveness.
How to Minimize Graduate School Debt
If you are interested in attending graduate school but worried about being saddled with high debt payments after you graduate, here are some ways to make your advanced degree more affordable.
Tap Free Funding Options
Scholarships, fellowships, and grants are some of the best ways to pay for graduate school. You can ask your school about institutional awards and also search for professional organizations focused on the field you’re interested in to see if they offer graduate scholarships. In addition, some schools also offer tuition waivers or some monetary awards for students who serve as teaching assistants.
Ask Your Employer About Tuition Assistance
If you plan to continue working while attending graduate school part-time, it’s worth finding out if your employer offers a tuition assistance program. Some companies will cover all or a portion of their employees’ higher education expenses. There may, however, be some strings attached, such as staying in the company for a specific amount of time. Reach out to your HR department to find out whether your employer offers this benefit and, if so, what the requirements are.
Borrow Only What You Need
There are no subsidized loans for graduate school, which means you’ll need to pay for all the interest that accrues on your loans. With Graduate PLUS loans, you are able to borrow up to your school’s cost of attendance, which can include expenses like transportation and child care. However, that doesn’t mean you should access the maximum amount. It’s a good idea to tap savings and income before turning to loans to cover all of your costs. This can help minimize how much debt you have to repay after you get your degree.
Look Into Online or Accelerated Programs
Some schools charge the same tuition for online and on-campus programs, but others charge substantially less for online classes. Also, the faster you can get a degree, generally the less you will have to borrow to pay for it. A one-year MBA, for example, will typically cost significantly less than a two-year program.
Explore Your Repayment Options
Federal loans offer income-driven plans that can keep graduate loan payments manageable after you graduate if your income is low. If you pursue a career in public service or nonprofit, you may also qualify for Public Service Loan Forgiveness.
If you’re getting an advanced degree that will boost your earning power, keep in mind that you may be able to refinance your federal and private graduate school loans after you graduate at a lower rate. This could potentially translate to hundreds or thousands of dollars saved over the life of your loan. Refinancing can also allow you to remove a cosigner off of your student loans.
You can refinance both federal and private student loans, but keep in mind that refinancing federal loans with a private lender means giving up federal student loan protections such as income-driven repayment plans and PSLF.
💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.
The Takeaway
Most graduate students in the U.S. leave school with upwards of $78,000 in graduate school debt. Depending on what type of degree you pursue and where you study, you could end up with less — or more — than the average amount of graduate student loan debt.
If you’re interested in grad school but concerned about debt, keep in mind that you may be able to lower the cost of your degree by getting fellowships and grants, becoming a teaching assistant, tapping your employer’s tuition assistance, and considering an online or accelerated program. You may also be able to refinance your grad school loans at a lower rate after you graduate, making them easier to manage.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
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