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Dollars for Grad School

How to finance your advanced degree with loans and scholarships

By Michelle Suthard

Are you ready to take your education to the next level? If so, graduate school is probably the next big step in your future. Grad school is an enormous commitment, but the rewards are just as tremendous. There are many reasons people choose to go back to school to get a graduate degree. For some, the lure of increased knowledge is enough. For others, the opportunity for personal fulfillment, career mobility and increased finances draw them back to academia.

According to recent surveys done by the National Center for Education Statistics, Americans with a graduate degree earn an average of 35% to 50% more than those with only a bachelor's degree. Sounds great, right? But you're probably wondering how you can afford another degree. Don't let tuition be an obstacle to achieving your goal. There are a variety of government and private loans, as well as scholarships available to help you finance your education. Read on to discover some of the best ways to fund your graduate schooling.

Federal Stafford Loans

Stafford loans are low interest rate federal loans available to most students, even if you pursue your degree only part-time. Stafford loans can be subsidized, which means that the federal government pays the interest until repayment kicks in six months after graduation. The subsidized loans are need based. Stafford loans can also be unsubsidized, where the interest is paid by you during school or afterward, and is available to all students regardless of need.

Stafford loans for graduate students have higher loan limit amounts than for undergraduate students. Grad students can borrow up to $8,500 per year of school. These loans have variable interest rates, but are capped at 8.25% or less, depending on yearly adjustments. All lenders offer the same rate for the Stafford loan, although some give discounts for on-time and electronic payment of the loan after graduation.

Federal Family Education Loan Program (FFELP)

This loan is a variation of the Stafford loan, and it only differs by the means of funds distribution. Instead of loan funds coming from the government, the FFELP offers low-interest rate loans through private lenders, such as banks, credit unions, schools and other lenders. Both programs are governed by federal regulations that determine the loan programs, loan limits and repayment options. Funds from both programs can be used to pay for tuition, fees, and room and board.

Federal Perkins Loans

Perkins loans are another type of federally subsidized student loans. These loans carry a fixed interest rate, currently five percent, which is deferred while you are in college and for the first six months after graduation. The school acts as the lender using a limited pool of funds provided by the federal government. The program limit is $6,000 per year for graduate students and $40,000 overall, including any Perkins loans borrowed as an undergraduate.

To apply for any of these federal loans, you must submit the Free Application for Federal Student Aid (FAFSA) available online at The FAFSA serves as the application for all government aid. Also note that all graduate students are considered independent for financial aid purposes. If you're married, you'll have to provide information on your spouse's finances as well.

Nellie Mae Private Loan

Nellie Mae offers EXCEL Grad private loans. This private loan is customized to meet the unique cash flow needs of graduate students. No income threshold is required and you're not required to make payments while you're enrolled in school at least part-time. Visit for more information and to apply online.

Private Education Loans

Private education loans help bridge the gap between the actual cost of your graduate work and the limited amount the government allows you to borrow. These loans are offered by private lenders (banks and credit unions) and there are no federal forms to complete. Private education loans generally have a higher interest rate than government-supported loans, but can help ease the burden created by unexpected school costs like books and lab fees and even emergency costs due to unforeseen medical injuries. To qualify for a private loan, the borrower will have to pass a credit check. Some schools are now offering private loans, so check with your financial aid office for more information.


\Scholarships are forms of financial aid that do not have to be repaid and are typically awarded to students with special qualifications, such as academic or artistic talent. You can also be awarded scholarships based on your particular field of study. Hundreds of thousands of scholarships from several thousand sponsors are awarded each year.

The best way to search for scholarships is to use a free online database, like This database is the largest, most accurate and most frequently updated scholarship database online. If you supply an email address to the site, they will email you when a new scholarship fitting your profile is uploaded. You can also check out Scholarship Resource Network at This database focuses on private sector, non-need-based aid and includes information on over 8,000 programs.

Getting Started

There are a few main things to keep in mind if you're thinking about going back to graduate school: you should always apply for financial aid every year, even if you think you don't qualify, because there are many factors affecting one's eligibility. In order to ensure that you get the aid you need, you should start your search as early as possible.
And take an ample amount of time to investigate what scholarships you might qualify for as well. This will enable you to determine the amount you will need to borrow. It's also a good idea to call or visit the graduate programs you're interested in to see what financial aid programs are available.

Once your research is underway, you may be pleasantly surprised that graduate school really is financially possible.

Michelle Suthard is a certified public accountant working for an asset management firm in Chicago.

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