Five years ago, when he was thinking about pursuing a Ph.D., Damien Frierson knew what he wanted to study—social work—and where he wanted to study it—Howard University in Washington, D.C.—but not where he would get the money. He'd already accumulated some debt from earning a bachelor's and two master's degrees and didn't want more, and faced giving up the $72,000 he earned annually.
He applied anyway, and discovered something every prospective grad student should know: By applying very early (about three months before the deadline) he put himself on the radar of the social work school, which contacted him about applying separately for a generous fellowship. For three years, the award covered the full cost of Frierson's tuition and provided a biweekly stipend totaling $18,000 annually in exchange for 15 hours per week of research, teaching, or other work.
[Explore the U.S. News Best Graduate Schools rankings.]
Frierson expects to graduate in 2014, and is covering the rest of the tab with his earnings as an assistant director of a domestic violence program in Philadelphia. "You really need to put funding somewhere at the forefront," he says.
To do so, consider these smart strategies.
1. Get your boss to pay: Many companies looking to boost their collective skill set without hiring will sponsor all or part of an employee's graduate schooling through tuition reimbursement. Last year, 58 percent of the 550 employers responding to a survey by the Society for Human Resource Management offered some form of financial assistance for grad school.
Most firms require that the coursework have some connection to the employee's job role—tax courses for an accountant, say, or computer science training for someone working in IT. And some companies require that the employee work at the firm for a certain period after school or pay back part of the tuition. Up to $5,250 of such tuition assistance qualifies as a tax-free benefit.
Absent a formal tuition remission program, workers can often earn assistance if they demonstrate to the boss how a course of study could add value, says Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania's Wharton School. And many universities offer reimbursement programs for their own qualifying workers.
[Get tips on persuading your boss to pay for grad school.]
2. Secure a scholarship: Graduate programs typically award scholarships and fellowships based on merit. "It's going to vary from school to school and where that particular student sits in that applicant pool," says Joseph Russo, director of student financial strategies at the University of Notre Dame in Indiana.
At many schools, aid is given out by academic departments or the specific graduate school instead of a central financial aid office, so you may have to do some digging. A graduate admissions official or someone affiliated with your desired program can help you sort through the options. Experts advise applying for funds as early as possible to ensure access to the full pot.
[Learn more about scholarships for graduate school studies.]
A range of private and public organizations also offer money for graduate school, though these fellowships are typically highly competitive. The Truman Scholarship Foundation, for instance, annually awards up to $30,000 to each of about 60 prospective grad students looking at public service fields. Both Cornell University and the University of California—Los Angeles provide comprehensive online databases of awards across a range of fields.
3. Work for the school: Research and teaching assistantships generally cover at least part of tuition and pay a periodic stipend in exchange for research or classroom instruction. Like scholarships, assistantships are often presented by individual departments.
Being proactive is key; once you know a specific topic you want to study, zero in on relevant programs and find faculty members in the field who might be willing to take you on as an assistant. Doctoral students typically have a better shot than master's candidates, since they're presumably considering a professorial career.
4. Borrow smart: Chances are you'll need to borrow at least part of the tab. To be eligible for federal loans, the first step is to file a Free Application for Federal Student Aid (FAFSA). Low-income students—which many grad students are once they're independent of their parents—might qualify for Perkins loans, which award up to $8,000 annually (to a maximum, including undergrad amounts, of $60,000) and have a 5 percent interest rate.
Stafford loans pay out up to $20,500 a year. The loans carry a 6.8 percent interest rate and a 1 percent fee, and a lifetime maximum of $138,500. Currently, all graduate Stafford loans are unsubsidized, so interest accrues during the entire time that borrowers are enrolled, though payments aren't required until six months after graduation.
For the rest, Graduate PLUS loans are available at 7.9 percent interest plus 4 percent in fees, but the origination fees on both Stafford and PLUS loans could rise thanks to a round of federal budget cust that went into effect on March 1.
Private loans are also an option, and lender Sallie Mae just dropped its fixed loan rates for grad students so they range from 5.75 to 8.875 percent, with no fees, from a top rate of 12.875 percent; its variable rates have dropped, too.
Potential borrowers can get a sense of the total loan tab—and perhaps size it up against an expected starting salary—using a student loan calculator, like those available at FinAid.org and StudentAid.ed.gov. Certain state, federal, and school-sponsored repayment programs also offer adjusted rates or loan forgiveness for qualifying graduates pursuing careers in the nonprofit or public interest sectors and certain in-demand fields such as teaching and primary care.
[Get more advice from the Student Loan Ranger.]
5. Take your credit: Grad students will also want to see if they qualify for the federal Lifetime Learning Tax Credit, which allows individuals to subtract up to $2,000 annually from their tax bill.
The credit applies to 20 percent of tuition and other required education expenses up to $10,000, and is available to single filers whose modified adjusted gross income is $62,000 or less, or to married people whose adjusted gross income falls at or under $124,000.
The bottom line: Students have to be creative, says Geri Rypkema, director of the Office of Graduate Student Assistantships and Fellowships at George Washington University in Washington, D.C. "Look at all possible sources," she advises, "because sometimes you have to put it together."