Andrew Asks: How Should I Pay for Grad School?

When one of our loyal users wrote to us with a question about funding his graduate studies, we knew just to whom we should refer him: Reyna Gobel, our education blogger and author of  Graduation Debt: How To Manage Student Loans and Live Your Life. Here’s our user’s original query and Reyna’s full response:

Dear Mint,

I’m starting a post-baccalaureate pre-medical certificate program in the fall and would really appreciate your advice and thoughts on how best to pay for my education. I’ve already obtained a Bachelors from the College of William and Mary (2008), have applied for and received some funding through FAFSA, but still need to cover my cost of living for the coming year.

VCU does not offer Federal PLUS loans, otherwise I would have applied for those. Do you have any advice?

— Andrew

Hi, Andrew.

Unfortunately, some schools offer direct loans, but do not offer  PLUS loans – the extra loan funds awarded beyond grants and direct loans for parents and graduate school students. However, you do have options.

In talking to Andrew, I learned he has enough money to last at least a couple of months while he weighs his options. This gives him time to acquire private loans if needed, calculate his expenses to see how much he needs to borrow for living expenses, and research graduate assistantship and part-time work opportunities.

Evaluate Goals

Since Andrew’s goal is to attend medical school after completing his graduate certificate, his top priority is getting the grades he needs to further his education. Medical school admissions are highly competitive. He called his academic advisor who let him know he could work 10 to 20 hours per week while managing his coursework.  Andrew has decided to err on the cautious side and look for a job that will improve his appeal to medical schools with 10 or fewer hours per week. He’s also pursuing scholarships to reduce borrowing for future semesters.

Determine How Much to Borrow

In Andrew’s case, he doesn’t know his living situation just yet and he’s applying for jobs. He needs to talk to his friends who live in the area to get a feel for what it costs to live in Richmond, Virginia, where the campus is located. Once he knows the true cost of living and constructs his own budget, then he can determine his personal cost of living for the semester. He should borrow this amount and use income earned from his job to pay interest while in school or pay back part of his loan early. He shouldn’t rely on part-time income until he starts his new position and feels secure. Andrew can always borrow less next semester because he can apply on a semester instead of yearly basis.

Since the process of applying for and receiving private student loans from a university disbursement can take up to a month or two, Andrew needs to apply at least two months before he needs money. Income can be a factor in private student loan credit decisions if he chooses not to use a cosigner, so he should apply before he leaves his current job to attend graduate school.

Research and Apply for Private Student Loans

Andrew has good credit and doesn’t need a cosigner, but if he does at a later date he should look for loans where you can remove a cosigner after a specified number of on time payments. Andrew has Sallie Mae federal loans so he starts his search with Sallie Mae private loans.  Sallie Mae loans offers loans with the ability to remove cosigners after 12 months of on-time payments, has zero origination fees, and a 2 percent rebate on payments made before graduation.

Andrew will compare these terms and the interest rate offered to him with what is offered by other banks by going to FinAid.

Additional Options If You’re Not Andrew

If you are not Andrew and your school doesn’t offer PLUS loans, follow the same procedures. If your school does offer Federal PLUS loans, apply for these loans first. Federal student loans offer fixed rates as opposed to variable rates where your payment can go up or down based on prevailing interest rates.

Good luck Andrew and to everyone else on their way to grad school this fall!

— Reyna