Finding funding for graduate study can be a difficult task, but, believe it or not, getting money is not nearly as confusing as you might think. Unfortunately, for graduate students the most widely available form of assistance is student loans. However, it pays to be diligent. A good first step is to check with your school about what financial aid for graduate students is available.
First, apply for financial aid even if you think won’t qualify. You may qualify for a subsidized Stafford loan or your school may decide to award you work study based on your financial need. There are a lot of factors at play and it’s best to know for sure rather than make any assumptions.
Second, the Free Application for Federal Student Aid (FAFSA) determines eligibility for Stafford Loan programs as well as for many private grants, fellowships and scholarships. Filing the FAFSA is essential.
Finally, the FAFSA is your application for federal student loan programs. If you don’t file a FAFSA, you won’t be able to take advantage of these low cost loan programs
You should also be sure to contact both your school’s graduate admissions office, and your department to inquire about the availability of assistantships, tuition remission, and/or school-specific fellowships.
For graduate students, financial aid is a fellowship, loan or assistantship program. The majority of graduate students rely on some form of financing (such as the Federal Stafford loan) to pay for their college tuition and expenses. You should also search for outside scholarships.
As of July 1, 2010, all federal student loans are provided by the US government through the Department of Education’s Direct Loan Program. A graduate student can borrow as much as $20,500 or for a Health Professional student, as much as $38,500 through the Federal Stafford Loan Program.
You can also borrow through the Federal Grad PLUS program, however the Grad PLUS loan is based on credit and repayment begins within 60 days after the second disbursement (there are deferment programs that allow you to delay payment while you are enrolled half-time or more). Under the Federal Grad PLUS you can borrow as much as your cost of attendance minus other financial aid including other loans.
There are also private student loan options to help meet costs not covered by the Stafford loan. If you are attending school half-time or more, you can apply to defer repayment until after you graduate.
If you do have to borrow, borrow only what you need. Keep in mind your expected salary as you sign your promissory note or accept a financial aid offer.
Filing the Free Application for Federal Student Aid (FAFSA)
Complete the FAFSA as soon as possible after January 1st of the year in which you will need funding.
It will be easier to fill out the FAFSA if you have these items handy:
- Your Social Security card and driver’s license
- Your W-2 Forms or other records of earned-income (and your spouse’s, if you are married) federal income tax return.
- Records of other untaxed income you received, including welfare benefits, social security benefits, TANF, veteran’s benefits, and military or clergy allowances
- Your current bank statements and records of stocks, bonds, and other investments
- Your business or farm records, if applicable
- Your alien registration card (if you are not a U.S. citizen)
Institutional Aid Applications
Some schools require you to complete a form they provide you. This is called an institutional aid application. On this form you will tell the school about outside scholarships you expect to receive and whether you’re interested in other types of aid such as work study. Often you can also use this form to explain any special circumstances not taken into account on the FAFSA. If your school requires one of these applications, they will mail it to you.
Eligibility for Financial Aid
Your eligibility for financial aid will be determined by your school’s financial aid office in conjunction with their review of your processed FAFSA data. The FAFSA calculates a number called Expected Family Contribution or EFC.
The EFC when subtracted from your college’s Cost of Attendance determines your financial need. Your college or university determines the Cost of Attendance (COA) and it will include tuition, room and board, fees and estimated living expenses including books and supplies.
COA – EFC = Financial Need
Financial need is a official term for how much need-based financial aid you’re eligible for. Your financial need is calculated by subtracting the EFC from the COA. In order for you to receive need-based aid, your Cost of Attendance must be greater than your Expected Family Contribution.
Your college or university will use the need-based resources they have available to try to meet your Financial Need. In most cases for graduate students, they will be determining whether you qualify for a subsidized Stafford loan.
Here is an example scenario and calculation:
Josh filed his FAFSA and received his Student Aid Report (SAR) where he noted the EFC as “01200″ (literally $1,200). His private university’s graduate program has a COA of $25,000. Using the formula above Josh figured out that his Financial Need is $23,800.
Josh’s financial aid office at the school used this same information to create a financial aid package. It looked like this:
$8,500 Federal Subsidized Stafford Loan
$12,000 Federal Unsubsidized Stafford Loan
Total aid: $20,500
Here, Josh received the maximum amount of subsidized Stafford loan available because his financial need was greater than the amount of that need-based student loan program. The financial aid office was able to meet $20,500 of his need through loans. Josh might be offered graduate tuition remission for work performed as a graduate assistant or receive an outside scholarship. If those options do not materialize, Josh could consider borrowing a Direct PLUS Loan for Graduate and Professional Students or a private student loan in order to cover the remaining $4,500.
Since the Cost of Attendance includes expenses beyond tuition such as room and board, Josh might also be able to find cheaper housing than what the school has budgeted for him to help save on costs.
Once the college has received your processed FAFSA data, they still might need more information in order to finalize your award. If the school needs anything, you can be sure they’ll notify you. Typical things they might request include federal income tax returns/transcripts, W-2 wage earnings statements, 1099′s and/or whether you’ll be receiving an outside scholarship. Be sure to answer the school promptly because they won’t be able to finish processing your aid until their requests are satisfied.
If something trips you up, or you have questions or don’t understand something, call the financial aid office–they’ll be ready and willing to assist.
Types of Aid
- Subsidized – the government doesn’t charge interest while you are enrolled half-time or more OR Unsubsidized – interest is accruing on a daily basis. You pay the interest or defer interest until you graduate or are no longer enrolled or not in deferment. However, you are not required to pay the interest until the loan enters repayment. Any unpaid interest will be added to the principal amount of the loan when the loan enters repayment.
- Fixed interest rate of 6.8%
- Up to 25 years to repay depending on total borrowed.
- Maximum of $8,500 Subsidized and $12,000 unsubsidized for a total of $20,500. Graduate Health Professional loan limit is as much as $38,500.
- Payment begins 6 months after you graduate or are enrolled on less than a half time basis.
- Available to graduate students.
- Fixed interest rate of 7.9% with a 4% fee
- Must meet federal credit requirements
- May borrow up to the Cost of Attendance minus other financial aid including other loans.
- Payment begins within 60 days after the second disbursement of the loan, but may be deferred while attending school half-time or more. However, interest is accruing daily and any unpaid interest will be added to the principal amount once the loan enters repayment.
- Up to 25 years to repay if total borrowed amount exceeds $30,000. Ten years is the standard repayment term.
Federal Work Study
- Generally offered to very few graduate students
- Available to students with need
- Net Federal Work Study earnings may not exceed financial need
- Award is paid directly to the student in the form of a paycheck
Check with your school regarding availability
- Tuition Remission
- Graduate Assistantships
Thousands of scholarships, based on need, achievement, affiliation and/or a myriad of other criteria are awarded each year. One source is ScholarshipExperts. Their goal is to provide students with the opportunity to complete their education regardless of their financial situation. It’s a good resource to use to research and apply for scholarships.
Check with your employer about tuition reimbursement for employees pursuing advanced degrees or loan forgiveness programs.