The Value of a Graduate Student Loan

Going to graduate school and taking out student loans to pay for it  can offer you many financial benefits, but the loans can also be a financial hardship. Tuition for graduate  programs can run from $5,000 to $38,000 per year. You might also need your loan to cover housing, books, supplies, food and administrative fees. If you primary motivation for going to graduate school is a salary increase, there are many things that you will need to consider before taking out that loan. A graduate degree might get you a better career, but is it worth the lost salary, and especially the student loans?

Reduced Income

Going to graduate school will be a big financial change if you have been used to working for some time. You might want to consider pursuing your degree part time to offset this adjustment.


If you already have financial  obligations from a house, car, undergraduate loan, or credit cards,  you cannot always defer these obligations while paying for graduate school. You may want to consider paying down these debts before going to graduate school.

Pick the Right Loan

When deciding  which kind of loan to take out, you should always take into account the “borrower benefits” offered. These are incentives that lenders offer so that they might stand out from the mass of other loans available. Some may offer principal or interest rate reductions. The kind of reduction that is more beneficial to you depends on whether you plan on repaying the loan right away.

If you plan on taking your time repaying the load, interest rate reductions can often save you more money than principle reductions as you get a  discount each year instead of just once. If you plan on paying  the loan back sooner rather than later, you will probably want a reduction on the principal instead. This benefit has the added advantage that it cannot be unearned, meaning it cannot be taken away from you like interest  rate reductions can be. Remember to read all of your loan agreement very carefully. Take out time specifically for this purpose. Benefits often have restrictions and limits.

While at School

The best way to minimize your loan load while at school is to be an as good a student as possible. Maintain good relationships with your professors and get good grades. In this way you will be much more competitive for scholarships, grants, and assistantships that will go a long way in reducing your debt load.

After School

After school you might be able to get your loans forgiven if you work in some parts of the public sector for some time. For example, teachers who work in low income areas often get their loans forgiven. Consolidating your debt with your undergraduate  debt might reduce your  interest rate.