Note: This content is part of a paid partnership with Citizens Bank.
Over 90% of grad students believe that pursuing further education pays off, offering greater opportunities and potential for increased earnings, according to a 2017 report from Sallie Mae.
However, this educational journey does come with a price tag. For the 2016-17 academic year, the average grad student incurred costs of around $24,812, with full-time students generally facing costs about 50% higher than their part-time counterparts.
If you're considering grad school but need guidance on financing, we consulted Christine Roberts, head of student lending at Citizens Bank, for insights.
What's the financial return on my grad degree?
According to Roberts, the initial step is assessing the total cost of your program, factoring in what you'll need to borrow versus what you already have. Next, research your current income and compare it to your anticipated earnings post-degree. You might create a spreadsheet projecting your future income growth at an annual increase of 3 to 10 percent based on industry trends.
Watch how your expected income rises over time and calculate how long it'll take to recoup your grad school expenses (after accounting for financial aid and scholarships). If the payback period extends to 20 years, consider if you'll have sufficient earning years afterward to benefit from the degree. Ideally, a two to three year payback would allow you to see the degree's income boost over your career.
While no one can diminish your educational experience, from a financial viewpoint, it's wise to pursue a path that maximizes income growth while allowing for quicker loan repayment.
What are my options for paying for grad school, and how do loans differ from undergrad?
Evaluate the advantages and disadvantages of full-time versus part-time enrollment, Roberts advises. Part-time students often enjoy lower costs spread over a longer timeframe and can earn a part-time income. Full-time attendance usually means higher tuition costs and possibly sacrificing income during enrollment. Note that some institutions may not offer part-time options.
Roberts recommends honestly assessing your savings and determining how much you can contribute to your education, as well as seeking merit-based scholarships and other forms of financial aid. The process is quite similar to what you experience during undergrad. In addition, explore federal and private loans, including the grad PLUS loan, which allows students to borrow up to the total cost of attendance at their chosen institution.
What's the typical repayment duration for grad school loans?
It really varies, Roberts explains, noting that on average, it takes around seven years to pay off student loans, and grad school loans are generally similar. Higher-cost programs for fields like medicine or law may have longer repayment times, but they often lead to higher salaries after graduation.
Ultimately, your repayment timeline depends on your financial situation and the choices you make.
Can I refinance my grad school loans?
Absolutely, you can refinance without penalties, Roberts confirms. If market conditions shift, you can refinance to secure a lower interest rate. This process mirrors refinancing undergrad loans; however, be cautious of what you might lose by refinancing away from federal benefits, Roberts warns.
One key benefit to consider is Public Service Loan Forgiveness (PSLF). If you work in public service—such as for a nonprofit or as a teacher in underserved areas—it's worth investigating PSLF before refinancing. Additionally, refinancing may mean giving up federal income-driven repayment options, so if you foresee difficulties making payments, consider holding off on refinancing.
