Tales from the Wallet: Financially Preparing for Grad School

financially preparing for grad schoolWe had a great discussion a few weeks ago about wedding finances, and now it’s time for the next post in our Money Milestone series:  grad school. We’ve talked about how to adjust your new student budget once you get to grad school, how to pay off student loans, how to juggle grad school and a full time job, and even whether you should get an MBA — but not this. Some of the best tips came from folks on the Corporette FB page and some of my personal FB friends, so a huge thank you to everyone! (Check out U.S. News & World Report’s Paying for Graduate School Guide for some additional advice.) (Pictured: J.Crew Factory Magic Wallet, $14.50.)

Before Grad School

  • Live like a student before you go. Keep your expenses down while you’re saving up — and create a new budget. This helps you save more, and also prevents culture shock once you have to dial back your lifestyle when you get to grad school.
  • Manage what you’ve already borrowed. Form a strategy to pay down your existing debt. In some cases you may even want to postpone applying to grad school until you have more of a handle on your finances and achieve a higher credit score (which can earn you lower interest rates). Consider deferring your undergraduate loans if it makes sense for your financial situation.
  • Make sure you know the numbers. In a recent post, Above the Law mentioned a new, “brutally honest” student loan calculator that shows you your future monthly payments in comparison to your expected salary after earning the degree.
  • See if your current employer offers tuition reimbursement. It may be slow going but you can pay for a grad school degree through this method alone!
  • Set up a 529 plan for yourself. While you’re saving, you get a deduction on your state taxes, and you can then use that account to pay for your grad school expenses. If you have money left over in the plan, you can roll it over into your kids’ plans. (Rules vary widely by state.) Resist the urge to raid your 401(k) for tuition costs.

Grad School Options

  • Research the areas where the schools are located. Compare the cost of living for each city, and find out if any of your possible schools require you to spend more for living expenses. Do you need a doorman building because you don’t feel safe in the neighborhood otherwise? Will you need to buy a car to get around?
  • Choose the best package. If one school will give you a scholarship and credit for two out of six required courses, that matters. Also, think about how long you’ll be a student. If a particular school allows you to complete your chosen degree in one year while another requires two, weigh the pros and cons of the programs — the former may be a wiser choice.
  • Look into health insurance options. Expect to be required to have coverage of some kind. Of course, depending on your age (under 26 vs. 26 and older), you may be able to get coverage through your parents’ plan rather than sign on with the one offered by your school.

Program-Specific Tips

  • Know your deadlines for scholarships and graduate assistantships. Graduate assistantships typically cover tuition and include a stipend — but you have to know the deadlines! As one reader (and grad school program director) noted on the Corporette FB page, “So many students miss the deadline, it baffles me.” Apply for as many scholarships as you can.
  • Consider school abroad. From one of my friends, now getting a master’s in cognitive science: “I taught in a developing country for two years, thus depressing my income. Then I got into grad school in Italy where tuition is cheap to begin with but is reduced further based on recent income. To pay for living costs I have to do freelance work back home along with school. (It’s worth noting that I didn’t depress my income by design for school; it was just a happy accident.)”
  • Consider school online. One of my friends got her master’s in library science solely online after she decided she didn’t want to practice law anymore. “It matters a lot more where I went to law school,” she notes. “Library school is one area where getting an online degree is completely and totally acceptable. No one has ever even asked me about it. … Most library schools at this point have at least a partial online option.”
  • See if your school will give you credit for work you’ve already done. Again, from my friend with her MLIS:  “I chose a school that would waive six credits (two classes) out of the 36 required, and waive the GRE if you already had any other graduate degree.”

As one reader noted, “Take out as small an amount of student loans as possible. Work if/when you can, even if it’s only part time, to help offset the costs. It may be hard, but it’s worth it. Nothing sucks more than having a giant chunk of your paycheck AFTER grad school go straight to repaying loans.”

Readers who’ve gone back to grad school — how did you pay for it? What would you do differently, if you could? 

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Comments

  1. If you think that you might want to start a family while in grad school, research the school’s policy on maternity/paternity leave. If you have to take a semester off how does that affect any assistantships you have? I’m not sure why so many people overlook this. This may not be true of all programs but there is a flexibility that grad school offers that prompts some people to have kid(s) during this time. But without the right support system in place, it can be very stressful.

    I second the study abroad tip. I have heard from friends that some schools in the Scandinavian countries do not charge tuition but all other living costs are on you. This might depend on program or university but it’s worth looking into if it reduces the amount of money you have to spend significantly and the school is well regarded. Also depending on what field you will be working in international exposure can be a good thing.

    • It used to be that all the public universities in the Scandinavian countries were free – ie. no tuition, but maybe a small stipend for your printing needs/healthcare/etc.

      Denmark changed in 2007 (?) that people from outside the European Union have to pay tuition. Norway is looking into it – but Norwegian universities are at the moment (afaik) free to study at also from people from outside Norway.

      More and more graduate programs are taught in English in continental Europe: http://www.iie.org/Research-and-Publications/Publications-and-Reports/IIE-Bookstore/English-Language-Masters-Briefing-Paper-2013-Update

  2. Anonymous :

    The most important point: do your research and some deep thinking to determine whether you should go to graduate school at all.

    Contrary to what you might read elsewhere, a graduate degree does not necessarily open a lot of doors. In fact, it may actually disqualify you from some positions because you’re “overqualified.” Learn what your expected earnings are going to be. Learn the odds of getting a job in your desired field. Learn the necessity of getting the degree you’re considering. Don’t necessarily trust schools to supply this information–law schools have been fudging their employment numbers for years. Understand that a high median salary does not imply that you will necessarily get close to having that salary–salaries for jobs in your area of study may have a bimodal distribution such that you will either make a lot of money or very little. Question why you’re considering going to grad school at all. Maybe you should just look for another job instead of a new degree.

    From personal experience, I can you that you shouldn’t go to law school unless you have a big scholarship (that isn’t dependent upon achieving a certain GPA to keep), your parents can pay for part/all of your tuition, or both. Law school at full price is just a losing proposition for most people nowadays. There’s a reason applications are way down in recent years. I can’t speak for other graduate degrees, but I would look into them

    It’s much easier to not live like a student if you never become one again.

    • I don’t agree that you shouldn’t go to law school unless you have a big scholarship, parental assistance, or both. However, I do think that people should think worst-case scenario when they apply, not just best case. Not everyone will be top 10% of their class, not everyone will get a Big Law job, not everyone who gets a Big Law job will love it and want to stay for years, etc.

    • I agree with the other o/p. When I was thinking of law school, my dad insisted that I NOT be buying anything expensive b/c he knew that I would be a student for the next 3 year’s and I would NOT be getting any financieal assistance. So I followed his advise and lived like a student, even tho I already had a BA degree. All thru school, I lived very frueagally so that I would NOT be to much of a drain on mom and dad, who paid 100% of my expenses. Also, since I was NOT in the top 10% of my class, OR on Law Review, it was clear to me that I was NOT goeing to get a big law job. I had a few guy’s tell me that they could help me out, but it seemed very shady so I never followed up with them, b/c I am sure I would have gotten nothing out of them anyway (other then an SDT –FOOEY!).

      So I think the advise is good, tho probabley I should have applied to be a TA in law school b/c the profesors loved me but those people were a lot smarter then me, and the profesors I knew just wanted to sleep with me, and the last thing I wanted was for some 45-50 year old bald guy’s with bad breathe to be huffeing and puffeing on top of me after class in their smelley office’s. DOUBEL FOOEY!

    • I don’t agree with this either. My law school does not give out scholarships and I had no parental assistance whatsoever. I worked for several years before law school, but I definitely did not have savings enough to pay for even a small fraction of the tuition. Flash forward to four years out of law school, and next month I will have paid off my law school loans in their entirety by hustling and paying them down aggressively (and yes, I survived the scourge of the 2009 downturn). If you work hard to get into a good law school, work your ass off to get good grades, and network well, you can get a job you love that is enough to live well and still pay off your loans.

      The bigger question re: law school is whether you really want to be a lawyer. And that’s been discussed to death on these threads over the years.

      • Wildkitten :

        I think no matter how much you WANT to be a lawyer, if there aren’t jobs for lawyers, you can’t pay back your loans with wants.

        • Anonymous :

          The jobs are always there for the BEST candidates.

        • I didn’t say or even imply you could pay anything back with “wants”–what I meant was that you should figure out whether you want to be a lawyer before committing to working your ass off to pay off loans if you don’t have scholarships or parental help. If you go just to go and without understanding and really wanting the commitment, you’re going to end up feeling like it was a mistake, probably.

          I just wanted to speak up and say that it’s just not true that anyone who doesn’t have the luxury of parental help shouldn’t go to law school without a scholarship.

      • Come on now, 90% of people won’t be the BEST candidates from their law schools.

        • I wasn’t the best, either! Top 40-50% definitely isn’t the best.

        • You don’t need to be anywhere close to top 10% if your school is one of HYS. And I think those are the schools jen is talking about, which don’t provide merit aid but are still very worthwhile endeavors, at least from an economic standpoint, for those who can get in.

    • DC Energy Attorney :

      I completely agree. Having gone to law school in D.C. and gotten a firm job coming out of school, (and no parental support or scholarship) I can say that half of my paycheck is dedicated to paying my law school loan payment every month (standard repayment plan over 10 years). About 1/2 of my class had no “legal” job a year out of school (granted, I graduated in 2011). I think going to law school is nearly always a huge, life-altering mistake for most people who go.

      • Wildkitten :

        + 10 I think going to law school is nearly always a huge, life-altering mistake for most people who go.

        Life worked out for me, but it almost didn’t, and it probably would’ve worked out even better if I hadn’t gone to law school.

      • Wanderlust :

        +1000. I wanted (and still want) to practice law, but the perfect storm of graduating in 2009 from a good-but-not-great law school in the middle-but-not-top of my class has left me over $200k in debt. It didn’t start out this high, but with 7.5% interest coupled with bouts of unemployment, the compound interest hit hard.

        I will be regretting this choice for a long time.

        • Blonde Lawyer :

          Just putting a plug in for SoFi refinance here. If you now have a good job with steady income there is a chance you can refi into a much lower fix interest rate. I had a high 8% variable rate on a private loan (capped at 18!%) with a cosignor plus federal loans in the high 6% range. My SoFi loan is in the low 5’s saving me a minimum of $15,000 in interest.

          Here is a link where if you refi you and I each get $100.
          http://friends.sofi.com/6MbbZ

      • +1. I am lucky to be employed, but I didn’t get the big law job I was sure I’d get going into law school (still trying to make that leap). Repaying my loans is going to make life very uncomfortable for the next couple of decades, even with IBR (which will result in a huge tax bill in 25 years if I have a significant amount of loan debt being forgiven). I thought long and hard about law school, looked at what data was available and crunched numbers, and decided it was worth it. Now, I have strong doubts.

    • Blonde Lawyer :

      I think it depends. I ended up better off post law school than I was before law school despite my debt (no parental payments, no scholarship but in-state tuition). I think I got lucky getting a good job in 2009 but part of it involved being flexible, renting out our house and moving to a state that was hiring. I know that won’t work for everyone and it was tough on my trailing spouse that took a job that he hated to move with me and keep us on health insurance while I took the bar. In the long run, we are better for it but there are many that weren’t. It is a gamble and if people are honest with themselves that a good chunk of it is chance instead of just whether they are “the best” (because everyone thinks they are the best) then I think making an informed decision to take the chance is okay. I think you need a back up plan too though. I could always have returned to my pre-law law enforcement job and likely done IBR and 10 year forgiveness instead of my private sector law job and actually paying the full amount of my loans (though refinanced).

    • The problem with this idea of only going to law school if XYZ are present is that this furthers the status quo of only rich white men (some white women) being able afford to attend law school. As a woman of color, I encourage other women and people of color to go to law school (if they want to be lawyers) because without a change in the legal demographics the laws that are stacked against us/our communities will never change. We shouldn’t discourage people from obtaining these very powerful degrees, rather we should be challenging why they’re so expensive (but the ABA apparently has other priorities).

      • Sure, but as another woman of color – in the meantime people of color are also the most likely to suffer the consequences of borrowing $200K+ and being unable to find jobs afterwards because we’re less likely to have parents and other family members that can help us out afterwards. There’s no point in going to law school if there are no jobs to be had afterwards. If you’re a person of color who got into HYS then that’s a different story – but if you have to go into huge debt to attend a middling law school with low employment prospects afterwards…there are many fields that need to be diversified!

  3. Meg Murry :

    Regarding the friend who got her MLIS online – in her case, since she had been a lawyer first, where she went to school probably didn’t matter. However, in my area there are far more people with MLISs than librarian jobs, and even for positions that don’t require an MLIS (preferred but not required) it is very common for most of the jobs at library A to go to people with their MLIS from school ABC, while library B hires mostly from school DEF, etc.

    Never underestimate that at some schools, the networking potential is worth far more than just the piece of paper you will get upon graduation. The piece of paper from an online school is probably sufficient if you want a promotion or internal move within your company – but to get hired into a different field, not necessarily so.

    Also, related to this morning’s sorority talk – many sororities have grad school scholarships, and our metro Panhellenic Alumni Council does as well. Look into all the organizations you were involved with in college to see if they offer grad school scholarships.

    • Agreed with MM — your law school MLIS friend probably has a leg up on other people because she already has a law degree and there aren’t many of those with law+library. Attitudes are changing (and it depends a lot on where you do internships/working experience), but I know a lot of people in my western state’s area judge people based on whether they went to the local in-person MLIS programs, or are coming from the state’s online-only ones. The perception can be that you didn’t want to deal with people — what does that say about someone trying to get into a service job? If you’re already in a library job and just need the piece of paper — online can be fine.

      I would definitely say regardless of online vs in person — check the type of classes offered, and whether it will be practical or theoretical classwork. What do you need most to succeed in your new field? My MLIS program was mostly theoretical and I didn’t realize it until I’d already started (…fresh out of college, straight to grad school, not the brightest idea) so I ended up having to get my practical experience late in the game.

      And make sure it’s an accredited program! I know your readers are smart people (that’s why they’re here!) but I’m noticing some schools are having their accreditation pulled or it’s pending or whatever. Pick a school with a solid reputation. Poke around and see where their graduates go to work. (Library or not!)

      And the in-person networking opportunities are really useful, like MM said. I’m having a hard enough time trying to find a job, I don’t know if I’d even be attempting to continue in the profession if I didn’t have a good support network from school.

      Ask people questions!!! They’re more willing to talk to students or prospective students, rather than the doofy grad who made mistakes and needs retroactive advice. Also, see what types of internships or “new hire” programs you can take advantage of while still in school, because if you find them after you graduate you might be SOL.

  4. For fields where it is possible, I would strongly recommend going to grad school part-time while working. By going part time, (1) my office paid for part of my tuition, (2) I still got a salary, so I did not have to take out loans, and (3) I did not have the pressure that some of my peers did to take any job available by graduation–I could wait for the ‘right’ post-grad job. It was hard to balance at times, and I probably would have had slightly better grades if I went full time–but it was totally worth it.

  5. Anonymous :

    for health insurance- sign up for medicaid, assuming your part-time work doesn’t put you over the poverty line, this is a free option. not great coverage, but it is adequate.

    • In a lot of states students aren’t eligible for Medicaid, particularly if they are single with no children. This is also true of other public assistance programs like TANF, Snap/food stamps, energy assistance, etc. I and a couple of other friends in grad school definitely tried that route. It doesn’t hurt to check, of course, but I would be willing to bet that in the majority of cases grad students are not going to be able to get Medicaid.

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