What Everyone Should Know Before Deciding How Much to Borrow for Graduate School

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People throughout the U.S. borrow money to go to school. The prices of tuition and textbooks are skyrocketing, and students are increasingly left with the overwhelming task of paying for their own education. Many students caught in this situation are understandably tempted to take out more and more loans, if they qualify. And, let’s face it—taking out student loans, especially with the difficulty of balancing work with school, may be tempting. Accepting money from the government or private lenders,

if you qualify, could mean working less frequently and feeling the pinch of a tight budget less severely in the short term. However, while taking out loans may temporarily make life easier, it could also lead to a more stressful payback period. With government student loan interest rates hovering between 5.41 and 7.9 percent, it is not necessarily cheap to borrow money. Many students, especially those who take out numerous loans, are stuck with large monthly payments and decades-long repayment plans. Therefore, it is incredibly important that you take time to consider the impact of taking out student loans, if you qualify, and the responsibility that comes with doing so.

Prior to borrowing money, if you qualify, consider, for example, your desired career and academic course of action. Will your desired career pay for the amount of money you’ll need to borrow (plus interest) to pay for your education? Will you be able to secure a job that pays for your student loans, and allows you to enjoy the lifestyle you want to enjoy after school? To determine whether or not your chosen job and field may allow you to comfortably pay off the amount of money you’ve borrowed, visit the United States Department of Labor’s Bureau of Labor Statistics (BLS). The BLS is a great resource for finding potential salaries and projected growth rates in various careers.

To find information about specific jobs and fields, visit the BLS’ Occupational Outlook Handbook. There you can conduct a search specific to your field or based on median pays, projected numbers of new jobs, projected growth rates, and levels of education required to enter certain careers. Knowing the rate at which your desired field is projected to grow, and how much jobs in the fields could pay, may help you determine whether or not graduate school is worth the long-term investment that comes with borrowing money.

Once you’ve decided that it is worth it (and necessary) to borrow money, begin by determining how much grant and scholarship money you may be able to secure if you are qualified. Once you’ve secured any potential grant and scholarship money, figure out how much of your tuition you can pay for through work or help from family. Then, after you’ve secured as much “cheap” money as possible, consider how much you will have to borrow. Start by borrowing from the government, if you qualify, and then, if you have to and are qualified, borrow from private lenders. When you borrow from the government, consider sticking with subsidized loans with lower or fixed interest rates if possible. If you borrow from private lenders, consider applying for student loans and avoiding credit cards and other types of more expensive loans.

When possible, work through the financial aid office at your school to help you secure student loans, if you qualify. Counselors at financial aid offices may often times know how to secure the best and least expensive loans. Also, meet with a financial aid counselor to discuss loans, their terms, and their long-term impacts.

Once you’ve started to borrow money, take care to track the amount and to limit the amount you borrow as much as possible. Every single time you borrow money, do the following:

  1. Identify each loan’s interest rate and determine whether it’s fixed or variable. Also, identify whether the loan is subsidized or unsubsidized. When possible, consider avoiding unsubsidized loans if you do not want to pay interest while you’re still in school.
  2. Keep track of how much you’re borrowing. It could be possible to borrow a little money here and there, only to end up with $10,000 more in debt. Every time you borrow money, remind yourself that you’re adding to a larger total and be clear about what that total is. Also, if you’re borrowing from multiple lenders, keep track of the total amount of debt with each company and the amount of debt you have overall.
  3. Determine how many more student loan payments you’ll have to make with each and every loan you accept. Every dollar that you borrow means a larger monthly payment or a longer payback plan. When you’re tempted to borrow more than you need, remind yourself with real numbers that you’ll need to work and pay for it later (which will come sooner than you think!).
  4. Borrow as frugally as possible. Think of students loans as real money—not something to be dealt with at a later date. Live and attend school as inexpensively as possible and borrow only what you need.

Student loan debt, for those who qualify, is often part of the reality of making the decision to enroll in a graduate program, but you can work to reduce the overall balance of your debt by keeping a close eye on the amount and type of money that you borrow and supplementing your financing plan by taking advantage of available scholarships, assistantships or fellowships for which you may qualify. Make use of campus services that could help you make financial decisions and always remember the money you borrow will have to be paid back in the future. 

About the Author: Annie Rose Stathes holds a B.A. in International Affairs and an M.A. in Political Science, from the University of Colorado, Denver.  She is currently an instructor of writing at Fort Lewis College in Durango, Colorado.

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