Financing an Advanced Degree: What Are My Options?

Perhaps what you wanted to do with your undergraduate degree hasn’t panned out quite as you’d hoped, or maybe you’ve planned all along to continue your education. That’s completely understandable—between the 2020 pandemic and the current housing crisis, times have been tough, especially for young adults. Earning an advanced degree is a great way to increase your earning power—or pivot to another industry entirely—but funding it can seem difficult. Fortunately, there are many options for financing an advanced degree, in addition to traditional student loans. Here are some avenues you may want to explore before heading back to school.

Graduate Education: Understanding Today’s Financial Landscape

Before you commit to pursuing an advanced degree, it’s important that you understand what you’re up against. Housing, groceries, and basic necessities aren’t the only things that have increased in cost over the years—higher education costs have risen, too. According to U.S. News, two years of graduate school can cost more than $100,000, and doctoral programs may cost even more.

Therefore, it’s important to understand that grad school is a big investment in your future—and not just an option to pursue if you’re “unsure what to do in life.” Most financial advisors will tell their clients to be very determined to pursue a certain career before they attempt to earn an advanced degree.

Financial Aid Options for Grad School: Federal Loans

Many graduate students use student loans to cover at least part of their attendance costs. The most common financial aid options are federal loans, and include:

Federal Direct Unsubsidized Loans. These federal student loans do not have financial need requirements and can be eligible for income-driven repayment options. You may also have access to Public Service Loan Forgiveness should you struggle to make your payments.
Federal Grad PLUS Student Loans. If federal unsubsidized student loans are not enough to cover the cost of your degree program, the Grad PLUS loan can help you borrow up to the cost of attendance of a graduate or professional school. PLUS loan rates may be higher than those found in the private student loan sector, and also come with origination fees. These loans also may not be eligible for some discharge or forgiveness programs.

If you are considering federal student loans, the Department of Education’s Loan Simulator is a great tool to help understand whether borrowing is the right decision for you.

Financial Aid Options for Grad School: Private Loans

The government is not the only entity that offers student loans. Banks and for-profit lending organizations are certainly an option, but many people find credit unions can be a better choice to finance higher education, usually at better rates and terms. To find a credit union that offers student loan financing, you can use our finder tool.

Private student loans may offer lower interest rates than federal loans do, and have other perks, as well. However, it’s very important to do your research when considering a private loan option. Be sure to compare different plans and determine which terms and provisions offer you the greatest benefit.

Exploring Alternative Grad School Financing Options

Traditional student loans have helped millions of people access higher education. However, they do have important considerations, such as:

High interest rates. It is no secret that, due to the way interest accumulates over time, the amount a borrower repays can often far exceed the amount that was originally borrowed. In 2024, the interest rates for federal graduate students are set at 7.05% and 8.05%, depending on the loan.
Long-term commitments. Traditional student loans often tie borrowers to an extended repayment period, sometimes up to 30 years. This long-term financial commitment can significantly limit flexibility and opportunities.
Consequences for defaulting. Defaulting on a student loan can severely damage credit scores, making it difficult to qualify for a car loan or mortgage. And unlike other types of debt, student loans are rarely discharged in bankruptcy.

To minimize the amount you borrow, you may want to consider alternative financing options available to graduate students.

Teaching and Research Assistantships

A graduate assistantship—which usually includes teaching or research—is a great way to gain financial support for your studies and valuable professional experience. Graduate assistants work a certain number or hours per week and receive reduced or free tuition in return. Oftentimes, they earn a monthly living stipend, as well.

As a teacher’s assistant, you would help professors with essential tasks like preparing lecture notes, leading discussion groups, assisting students, and reviewing assignments. Sometimes you might even be asked to teach the class.

As a research assistant, you would help with data collection and analysis, report writing, and literature review. You might also be asked to tidy or organize the professor’s lab as needed.

Compensation varies by program, but typically, it is on the low side—the national salary average for a graduate assistantship is $36,776 per year. Still, the financial aid benefits and resumé boosting make it an attractive option for many students.

Fellowships and Scholarships

You are probably already familiar with the concept of a scholarship, a form of tuition aid that doesn’t have to be repaid. Some scholarships are awarded based on academic achievement, and others are designed to help those with significant financial needs. Only 1 in 8 students receives a scholarship, and of those that do, about 97% receive less than $2,500. However, every bit helps, and with 1.7 million scholarships awarded each year, it’s still an option worth pursuing.

A fellowship is very similar in that it is a monetary award given to scholars to cover their academic pursuits. Some fellowships simply cover the cost of tuition, while others fund scholarly activities outside of the classroom, such as conferences, projects, and dissertations. Most fellowships are merit-based, and fellows are selected based on their potential to make a positive, long-lasting contribution to their academic discipline.

Both of these options are highly competitive, so it is important to research and apply for them as early as possible.

Employer Sponsorship and Tuition Reimbursement Programs

For a few reasons, your employer might be interested in helping cover the costs of your ongoing education. First, boosting an employee’s education level makes them more valuable to the organization, and more qualified to eventually work in more senior-level positions at the company. Second, covering an employee’s tuition also provides companies with a tax break. And lastly, it can be an exciting perk that helps attract more high-quality candidates and retain those that already work at the company.

Many businesses already have a tuition reimbursement program in place. If this is the case for your company, approach your HR representative and ask how to apply. In order to reap the benefits of paying for your education, most employers require you to stay with the company for a set period of time, or else you may be required to repay them. You may also have to pay for costs upfront and be reimbursed. If your company does not already provide tuition reimbursement, discuss the possibility with your supervisor and human resources.

Taking Your First Steps Towards Grad School Financing

Figuring out how to pay for graduate school can be daunting, but researching the options available to you is the first step to ensure you’re as financially prepared as possible. For the best outcome, be sure to explore all of your options, and seek guidance from academic advisors and financial consultants. There are also many resources available online to help you find funding options, including our credit union partners. Credit unions can also help you refinance your student loans, so you can pay off your student debt more quickly. As long as you do your due diligence and work hard, you should be able to pursue the academic program that will take you where you want to go in life.