It's your senior year and you are contemplating whether to enter the "real world" of work or to delay reality and go to graduate school. There are many things to consider as you decide between grad school and work, one of which is how you will finance school if you pick that route.
Thinking about taking on the high cost of graduate education is probably overwhelming considering you're probably still trying to figure out how to pay back your undergraduate loans. However, all is not lost. Here is help as you wade through the financing jungle.
Going to School for Free
Here's one thing to keep in mind: if you are reading this magazine, you are probably a step ahead of the majority of those considering graduate school because the major you're in pretty much pays for its graduate students! (Assuming you want to continue your graduate education in the same area of science and technology.) However, there is an exception: if you decide to get a terminal master's degree, which is a program that will only offer you a master's degree, and you do not have the option to continue on to get a Ph.D., then you may not get funding to pursue your education.
However, for those of you remaining in science and engineering who are willing to pursue a Ph.D., there are several opportunities to have your education paid for, including fellowships and assistantships.
A fellowship is money given to help cover tuition and living expenses in the form of a stipend. These fellowships can be given institutionally - they are usually awarded by the department and can be used only at that school - or are given by a sponsor such as the Department of Defense, the National Science Foundation, etc., and can be taken to the institution of the student's choice. When it comes to fellowships, if you are funded by an NSF fellowship (or one of the other prestigious national fellowships), your chances of getting into the school of your choice will probably go up significantly. What school wouldn't want to take a student who comes in with his or her own money?
Another way to fund your graduate education is through assistantships. There are two types: a teaching assistantship (TA) or a research assistantship (RA). As a TA, you help students, lead discussion sessions, grade homework and tests, and sometimes even teach a class in the professor's absence. As an RA, you are expected to help faculty with research projects. Again, this money helps cover the cost of tuition and living expenses. However, with assistantships, you do have to do some work to earn it. As much as you like your free time after classes or working in the lab, you will have to give some of it up because being an RA or TA can take a significant chunk of time.
Getting a Loan
So, what if you decide you don't want to have to work for the money? Or if you are a student pursuing a terminal master's degree and/or a professional degree, i.e., law degree (J.D.), medical degree (M.D.), or business degree (M.B.A.)? For these students, a loan is probably going to be the route to take. There are many types of loans out there from the federal government (like the Perkins and Stafford Loans) and loans from private institutions.
Both the Perkins and Stafford Loans are need-based. Before applying, you will be required to fill out the Free Application for Federal Student Aid (FAFSA). This helps the government determine your financial need. Perkins loans have lower interest rates and are for students with exceptional need. Stafford loans are the most common. Stafford loans are either subsidized, which means they are based on financial need and the government pays your interest, or unsubsidized, which means you didn't meet the financial requirements and interest accrues while you are in school. You typically have a six-month grace period after graduation before you need to start paying back the money.
Another source of funding is private loans. However, be extremely cautious of these types of loans. Typically, these loans cost more than those given from the federal government and do not offer forgiveness options. Another thing to consider is that private loans have variable interest rates unlike the fixed rates offered by the government. As everyone has probably learned in the news recently from variable interest rates on home mortgages, variable rates are bad; fixed rates are good. Another thing to keep in mind is that, like a home mortgage, private student loans are based on your credit score, which might not be too good since students typically put a lot on their credit card while undergrads.
The good news about taking out a loan for graduate school is that it should be easier for you to qualify. When you were applying for undergrad, you were considered financially dependent. That means that your financial aid was based on your parents' income. By the time you are applying for grad school, you are considered an independent adult and the aid will be based solely on your income. As a poor starving student, this is a good thing!
Timing is Everything
Regardless of funding source, timing is crucial. Start your research for funding sources as soon as you make the decision to go to graduate school. In fact, you should be applying at the beginning of your senior year. Many application deadlines are due before you submit your graduate school application. What is helpful is that the personal statement you write for grad school can be modified and used for those highly sought-after national fellowships like those offered by NIH, NSF, DOD, etc.
The financing jungle can be quite complicated. Do your homework. There are a lot of sources of funding, but you have to find it. There are many free websites that are helpful: don't pay for someone - or some company - to do that research for you. Keep in mind the end result; those initials after your name - whether they are Ph.D., M.D., J.D., or M.B.A. - are probably going to help you earn more money than just having the initials B.S. or B.A.