Should You Take Out New Loans for Grad School?

Published on: May 28, 2020fb-roundtwitter-roundemail-round
woman looking in mirror with grad school degree

The Story

The economy and job market are riding the struggle bus right now. Which miiight have you thinking about signing up for grad school. But there are a few things to consider first. Like, ya know, how to pay for it.

Sounds smart.

So start with some research. A LOT of research. Think: what kind of job security and earning potential your desired field usually offers. (More on that later.) And what level of education it typically requires and/or rewards.

If grad school still seems like a good idea, check out a few specific programs. Find out how long they take, whether you can work at the same time, and if you’d want to move to attend a great school.

What about the cost?

Depends on the program. But the avg grad student paid about $18,000 in tuition and fees for the 2016-17 school year. It could be less if you’re willing to take classes online. (Note: that’s usually a bigger deal when every school isn’t online.)

Chances are, you might need to borrow some money to cover those costs. And, good news: right now, federal student loan interest rates are at their lowest since...ever. So shop around for the best rates you can find. (Psst...a good credit score usually helps with that.)

Just keep in mind that Uncle Sam has his limits. For most people, the max amount of student loans you can take out is about $138,000. That includes any unpaid loans you have from undergrad.

Anything else to think about before applying?

Calculate the ROE – return on education. As in, your potential post-school salary minus any lost earnings during the time you’re in school and your potential loan payments. (Handy calculator here.)

The gov says a master’s degree could help you earn an avg of 16% more than if you stuck with a bachelor’s. But it varies a lot by industry. And you might have to press pause on other expensive life goals to get there. Like buying a home, planning a wedding or starting a family.

Hmmm. Is there any way to make that equation a little happier?

Find out if your current job offers tuition assistance – or if they’ll consider helping out even if this benefit isn’t already in your HR handbook. If higher ed could make you better at your job, they may be willing to pitch in. You can also look for ways to earn while you learn through fellowships or work-study programs. Like becoming a research or teaching assistant.

Oh, and don’t forget about financial aid. About 40% of grad students received grants for the 2015-16 year. Google “grad school scholarships” to find more ways to get schooled for free.


Going back to school could eventually = a higher paycheck. But this is one of those times where it takes money (and time) to make money. Think about your current financial situation and long-term goals before buying new school supplies.

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