The following is a guest post from Tim, a personal finance writer at FaithandFinance.org - a Christian financial help blog that provides financial insights for individuals, businesses, and churches. Outside of finance, Tim enjoys spending time with his wife, playing the saxophone, reading economics books, and a good game of RISK.
College can be a great way to advance in your career and to become more valuable, especially if you have a graduate degree like an MBA. Unfortunately, these programs can cost anywhere from $20,000 – $75,000 + for a two year program.
Making the decision to pursue a graduate degree should involve planning that considers your current school debt, your current income, and your projected income after the degree is completed.
Here are some tips to budget in graduate school so that you can keep your school loans as low as possible.
1. Get an emergency fund. You should try to save enough for six months of expenses before you pursue a graduate degree. The last thing you want is for your school loans to come due while you’re still looking for a job. Having an emergency fund is an important first step in budgeting for graduate school.
2. If you’re married, practice living off of one income. You should try living off of your spouse’s income for six months before you start school. This will help you to cut your expenses and allow you to adjust to a lowered income. Bonus tip * Use this time to save all your income so that you can reach or exceed your emergency fund.
3. Apply for graduate assistantships or fellowships. Many schools offer assistantships that reduce the cost of attendance and even pay a stipend while you’re studying. You might have to work in the department office or grade papers, but having a few hundred dollars extra a month can offset some of your monthly expenses.
4. Get a part time job. Yes, graduate school is tough, but you can work here and there. Try to use the extra money to support monthly expenses like your rent, food, or car. Living on the income from a part time job is MUCH better than relying on school loans for food. The difference in total amount borrowed can be huge!
5. Calculate loan payments before you borrow. Understanding how much your school loans will cost you each month is crucial when budgeting for graduate school. If you borrow $50,000 you should be prepared to make payments of at least $500 per month for ten years. See why it’s important to budget before you even borrow?
Remember, you can live like a student now OR you can live like a student later. Living like a student now and doing your best to borrow as little as possible will allow you to live like you want to later. I hope you find these tips to be helpful if you’re considering graduate school (or undergraduate school for that matter).
Crystal’s Comments: Mr. BFS was lucky enough to find a mainly-online masters program for school librarians that he was able to participate in while still teaching. He only had to make the hour and a half drive to the campus every 2 months or so. He also took at least 2-3 classes every semester, so he was able to complete it in 15 months instead of 2 years. We built up an emergency fund before he started and used that amount that we were setting aside every month to pay for grad school as he went – no grants, no scholarships, just $15,000-ish in cash…oof…
What are some ways that you planned to budget for college? Do you have any suggestions we missed?
Another tip is to see if your employer will pay for it. A previous employer paid for half of my graduate school. All it took was me contacting HR and filling out some forms. They would have paid for the entire thing, but I (probably unwisely) decided to take out a loan for the rest.
A completely unknown thing to many is that PhD programs are often completely free (and then some). For example, my PhD program gave fellowships to every single student in the program. At many research universities, this is the norm. Generally, it’s very true for science, engineering, language, and social science programs, and may be less common for humanities and interdisciplinary programs. (Although I generally advice against any interdisciplinary program).
of course, with a PhD you may not have the earning potential of other graduate degrees, particularly if you stay in research. however, PhDs in fields like engineering, economics, statistics, science, and public policy often are not staying in research but going into industry.
Generally, during your PhD you are either working as a research assistant for a professor or teaching/ assistant teaching some classes. You usually get a tuition grant, and that assistanceship will pay you a small living stipend, between $15,000 and $30,000 depending on your field and university.
@Jackie -
That IS a good tip! You never know unless you ask and every little bit helps. Watch out for contracts to continue working for the company – just be careful to weigh out the pros/cons.
@Valerie –
Yes! I would definitely recommend a FREE PhD program to someone who wants to pursue doctoral level studies. Paying for a PhD can be $$$ especially if your goal is to teach (makes it tough to pay off debt on a teacher’s salary). Another tip for working professors is to see if their university will pay for them to attend a PhD program.
Yes, definitely ask for TA or RA positions. It is a great way to help with tuition, build relationship with professors, and connect with younger students. I was a TA when I was working on my MS and it really helped a lot.
My suggestions were already mentioned above. Also, don’t forget to apply for scholarships.
I paid for it all myself right out of undergrad, and paid for it literally and figuratively after graduation. I had a ton of debt, but I was afraid that if I didn’t go to school right away, I would never go back.
Here’s our post on the subject… doesn’t got into much detail with professional schools though: http://nicoleandmaggie.wordpress.com/2010/10/12/how-much-to-pay-for-graduate-school/
I was lucky enough to have my employer pay for mine, and there were several others in my program who had this as well.
My MBA came with the following strings from my employer: I would get $5,250 a year until it was paid off or I left the company. If I stayed until it was paid, good for me and them. If I left, I wouldn’t get the remaining reimbursement.
My friend’s was totally paid, but he had to sign a 2 year contract with his company for them to pay for it.
Don’t forget, you can often NEGOTIATE your assistantship stipend! I don’t know if it works like that everywhere, but I attend a bigger research university. I would say most of my classmates didn’t accept the first offer from the department when we started.
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