Paying for Graduate School

Free money, then federal loans, then private loans. That's the order in which you should seek graduate financial aid, just as with an undergraduate program, indicates Nancy Morgan, product manager of the Credit Union Federal Student Loan Network at CUNA Mutual Group, Madison, Wis.

Financial aid you don't have to pay back comes in several forms, including research and teaching assistant positions, where graduate students do research or teach classes in exchange for tuition assistance and often stipends. There also are fellowships (graduate-level scholarships), which usually are merit-based, or grants (one-time gifts used to accomplish a specific purpose, such as a particular research project). Many schools offer these types of free money, as do diverse associations, nonprofits, and businesses, and they range from a few hundred dollars to covering your full tuition plus a stipend.

If you still need assistance after exhausting free money sources, federal student loans are the next best option. They have relatively low interest rates and you generally don't have to make payments while you attend school. Some loan options are the same as for undergraduate students, but the maximum amounts you can borrow are higher.

Investigate need-based Perkins loans directly from schools, and Stafford and PLUS loans from various lenders.

If you've maxed out your federal loan options and still need assistance, you can seek private loans from various lenders. Origination fees and interest rates for private loans vary considerably, and usually are significantly higher than for federal loans.

Despite the financial burden, graduate school pays off for most people. In 2007 the Bureau of Labor Statistics reported that workers with a bachelor's degree earned $987 a week, on average, while those with a master's degree averaged $1,165 and those with doctoral degrees $1,497.

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