Ask a Professor: Should You Go Into Debt for Graduate School?

Does it make sense to go into debt for grad school? A professor weighs in on grad school debt with seven money-saving tips for grad students.
portrait of Genevieve Carlton, Ph.D.
Genevieve Carlton, Ph.D.
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An award-winning historian and writer, Genevieve Carlton, Ph.D., has published multiple scholarly articles and a book with the University of Chicago Press. She currently works as a writer and consultant. She holds a Ph.D. in history from Northwestern...
Published on February 3, 2022
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  • The average U.S. graduate student owes over $90,000 in student loans.
  • Before going into debt, consider your field, earning potential, and funding options.
  • Grad students can limit debt with assistantships, fellowships, and work benefits.
  • Less debt often means more options for those with a master's degree or doctorate.

On average, graduate students in the U.S. owe more than $90,000 in federal debt. For master's students, the average debt sits at $71,000. And for those with a Ph.D., the average skyrockets to nearly $160,000.

So should you go into debt for grad school? The answer depends on many factors, including the program, your funding options, and your future earning potential.

I lucked out in graduate school. During my two years as a master's student and five years as a doctoral student, I only had to cover the cost of two quarters of tuition. Graduate assistantships covered the rest of my expenses, including a quarter million dollars in tuition.

In the end, I took out student loans to pay for one quarter and covered the cost of the other quarter with my savings. As a grad student in a field not known for its earning potential, I knew that choice made the most sense.

But what grad school payment method works best for you — and whether you should take out student loans — ultimately depends on several factors.

Questions to Ask Before Going Into Debt for Grad School

Who should take out loans for grad school and who should avoid unfunded programs? The answer depends on your circumstances. Before going into debt for graduate school, make sure you ask yourself the following questions.

What Kind of Program Is It?

Are you considering a master's in library science, a doctorate in healthcare, or an MBA? The type of program matters when it comes to debt.

Certain graduate programs nearly guarantee the need for loans. According to NerdWallet, medical school comes with an average debt of over $200,000. Other programs that average six figures in debt include dental school, pharmacy school, and veterinary school.

In other programs, grad students should exhaust other funding sources before taking out loans.

In many master's programs, more than half of students graduate with debt. Around 51% of MBA graduates have loans, as do 56% of MS grads, 59% of MA grads, and 62% of M.Ed. grads.

What's Your Future Earning Potential?

The type of program shapes your future earning potential. On average, workers with a master's degree earn around $80,000 a year, whereas those with a professional degree or doctorate earn around $100,000 a year, according to 2020 data from the Bureau of Labor Statistics.

But those numbers can vary significantly depending on your field. Rehabilitation counselors, marriage and family therapists and healthcare social workers, for example, all need master's degrees but report lower median salaries of $37,000-$52,000 per year. Therefore, in these fields, grad students should avoid taking on large amounts of debt.

On the other hand, nurse practitioners, political scientists, and computer scientists also need a master's degree but report far higher median salaries of $117,000-$127,000 per year. In these fields, the return on investment may justify higher loans.

What Are Your Funding Options?

Some programs fund graduate students. Doctoral programs in the humanities, social sciences, and natural sciences may offer assistantships and fellowships for graduate students.

But funding options vary by program. Law students, for instance, typically do not qualify for assistantships and therefore have to rely more heavily on loans. Data shows that nearly 3 in 4 law students graduate with debt.

In certain fields with lower earning potential, grad students should choose a funded program or a less expensive option, like an in-state, public university.

How Will Debt Affect Your Career Opportunities?

Many grad students leave their programs with debt. But how will debt shape your options after school?

Consider a law student who has $160,000 in student loans — the average amount of debt for recent law grads. On a 10-year repayment schedule with a 6.8% interest rate, that graduate will face monthly payments of over $1,800. That high payment might rule out lower-paying career paths.

On the other hand, a nurse practitioner with $47,000 in student loans might find it easier to pay their monthly $540 payment.

If a large amount of debt will negatively affect your career options, consider other ways to pay for graduate school.

How to Save Money in Grad School: 7 Key Tips

If you're set on getting a graduate degree, it's important that you prepare for the different costs that lie ahead. Learn how to afford grad school with these seven financial tips.

1. Prioritize Fully Funded Programs

Prospective grad students should start by researching fully funded programs. These programs typically offer teaching assistantships, research assistantships, and/or fellowships for grad students.

Under these arrangements, graduate students receive tuition remission — meaning you don't need to pay tuition — plus a monthly living stipend. In addition to your studies, you may have to work part time as a researcher or teacher.

In general, fully funded programs are more common at the doctoral level and in the arts and sciences. Top-ranked programs also often provide better funding.

2. Apply for Scholarships and Fellowships

In addition to institutional aid like assistantships, graduate students can apply for grants, scholarships, and external fellowships. In fact, grad students qualify for many more fellowships than undergrads.

Look for fellowships and scholarships based on your field of study, intended career, and school. Underrepresented groups may also qualify for special scholarships.

3. Work During Grad School

Working while in grad school comes with several benefits, like being able to use your salary to cover costs rather than taking out loans.

Working full time during school, however, can limit your options and make it extremely challenging to keep up with coursework and assignments. Fortunately, many graduate programs offer flexible classes and part-time options designed specifically for working students.

4. Research Employer Tuition Assistance Plans

Some employers help employees cover educational costs through employee tuition assistance or tuition reimbursement programs. Today, many major U.S. companies offer this unique benefit.

Future grad students can research policies at their company through HR or seek out jobs that provide tuition assistance. Keep in mind that many plans reimburse costs at the end of the term and limit the benefit to $5,250 per year.

5. Get an On-Campus Job

Looking for a job during grad school? Consider positions on campus. Some staff positions come with major perks, such as reduced or free tuition.

However, tuition benefits may only apply to full-time staff, so make sure to research the school's policy before applying to jobs there.

6. Find a Work-Study Position

Work-study pays students to work in qualifying roles, typically on campus. Like undergraduates, grad students can qualify for federal work-study jobs by submitting the FAFSA each year they're in school.

A work-study job can help cover additional educational and living expenses, such as room, board, and textbooks.

7. Plan Ahead

Planning ahead can help grad students save money and limit their debt. For example, when comparing grad programs, research the total credits required and the total cost, including any fees on top of tuition.

Once you're in grad school, plan out your program to minimize costs. Work with a faculty advisor to design your course of study. That way, you can avoid taking unnecessary classes that raise the total cost of your degree.

How to Choose a Graduate Program

What if you receive offers from multiple programs with different funding and costs? Does it always make sense to choose the least expensive program?

Ultimately, the right choice depends on your priorities and field. In some fields, attending a top program might pay off in terms of job opportunities, even if it means taking on more debt. In other fields, an affordable program will pay off more in the long run.

Talk to an academic advisor or someone in the field to weigh your options.

When I applied to Ph.D. programs, it came down to two offers. Both were great programs with fantastic potential advisors, but one offered five years of guaranteed funding and the other only guaranteed one year. I chose the program with higher funding and had no regrets.

While most grad students take out loans, it's still a good idea to limit your total amount of debt. Once grad students enter the workforce, they often appreciate a lower monthly payment.

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