Figuring out how to save money for graduate school can be overwhelming, especially if you are still paying off loans for your undergrad degree. But finding the money to pay for school doesn’t always mean you have to pick up a side hustle or take on more debt. It is possible to save for graduate school if you plan ahead and adjust your current budget. Here are some ways to help save up.
Strategies to Save Up for Grad School
1. Splitting Up Your Paycheck
If you are currently working and get regular paychecks, one of the simplest ways to start saving more is to automate as much of the process as possible. If your workplace has direct deposit, you could contact HR and see if you are able to add another bank account, and designate a certain amount from every paycheck to go into your savings account.
It can be as much or as little as you’d like, but putting the money directly into savings makes it harder to spend right away. By automatically transferring the money into your savings account, you eliminate the hassle of manually parting with it.
Recommended: How to Automate Savings
If your company doesn’t offer the option to split your paycheck to multiple accounts, you can contact your bank directly or check online to see if they offer a recurring transfer. Banks are typically able to set up transfers for you automatically on your payday.
To decide how much money you’re able to save each month, review your monthly budget before starting. If you don’t have one, put one together.
2. Opening a Separate Savings Account
While you shouldn’t necessarily open a new account for every savings goal in your life, as that could get messy fast, setting up a new, separate savings account with your bank for grad school is another way to potentially maximize your money.
Opening a new account with a specific goal could help you keep track of the goal and make your progress tangible. Having a separate account specifically for school can also help you manage and keep track of spending on books and other school-related costs.
These first two ideas can work together to get you progressing on your savings goal. It can be intimidating to commit to allocating some of your budget for savings, but if you make the process regular and automatic, you may be surprised to find how little you miss that extra cash.
3. Don’t Forget Financial Aid
The Free Application for Federal Student Aid is not just for student loans—you could also receive work-study and grants by filling out the FAFSA®. Just like undergraduate applications for federal financial aid, students must demonstrate need, must be a U.S. citizen or eligible noncitizen, and be enrolled or accepted as a regular student pursuing a degree beyond a bachelor’s (here’s the eligibility criteria right from the Department of Education .
However, when graduate students fill out the FAFSA, they may be considered independent, meaning their parents’ income is no longer taken into consideration.
Recommended: Independent vs Dependent Student: Which One Are You?
For some people, this might actually mean they are eligible for more financial aid as an independent individual. The amount a student is awarded will be based on factors including their income and financial assets. Students cannot be in default on a prior student loan to be eligible for additional aid.
Regardless of dependency status, graduate students may be eligible to receive PLUS Loans. These unsubsidized loans can be taken out in amounts up to the cost of attendance, but be aware you can’t have an adverse credit history to qualify.
There’s also the option of financial aid that isn’t typically repaid, in the form of scholarships or other grants, or scholarships from your state based on field of study, interest, or school type.
File your FAFSA as soon as possible after October 1, the year before each enrollment period. Since there are limited funds, the sooner you file, the better chance you may have of getting the most aid possible.
4. Checking With Your Current Employer
Even if you are not in a career where your employer is expected to pay for a graduate degree, a lot of companies may offer some contribution to ongoing education if it’s possible to show that it will be relevant to your job.
Tuition reimbursement varies depending on your company and industry, but some may offer tuition assistance to their employees. While it might not cover your entire graduate school cost, a tuition reimbursement benefit from your company could significantly lower the amount you need for school, which in turn could lower your dependence on loans.
If you have existing student loan debt from your undergraduate education, check to see if your company offers employees a match (up to a certain amount yearly) on payments made toward student loan debt every year. In this way, employers can make a regular contribution to help with your student loan balance, while you make your regular payments, too.
5. Considering Schools Abroad
Schools in Europe, South America, and Africa may be significantly less expensive than universities in the United States. But, before enrolling in graduate school abroad, make sure you understand how your industry will accept and transfer over any foreign degrees. You’ll want to make sure that your grad school degree is a decent ROI.
While the cost of living might be higher in some other countries, international graduate programs can also save you time; some PhD programs in Europe are only three to four years, as compared to six or seven in the U.S.
6. Refinancing Current Student Loans
If you are currently paying off undergraduate student loans, the idea of juggling paying for grad school and paying off undergrad loans may seem daunting. It’s helpful to get your current debt situation under control before saving for graduate school. One option that could potentially result in monthly savings is student loan refinancing.
Refinancing your student loans could potentially result in a lower interest rate, which could mean lower monthly payments (depending on the loan term), potentially freeing up room in your monthly budget. A lower interest rate could also mean spending less money over the life of the loan.
If you want to start saving for graduate school, refinancing existing loans and putting any difference in what you paid before toward savings could be one way to boost your savings.
It’s important to know that loan refinancing means you’re no longer eligible for federal student loan forgiveness, deferment, and income-driven repayment. But, some private lenders, including SoFi offer forbearance options for students who are in graduate school.
A lower overall interest rate can help you with your goal of saving money to pay for graduate school, helping to make your savings goals more manageable as you embark on this exciting next step in your career.
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The Takeaway
Graduate school doesn’t necessarily mean taking on more debt. Those looking to focus their savings plan for graduate school can review their monthly budget and automate as much of their savings as possible. Additional options to pay for college include federal student aid including federal student loans, scholarships, grants, and work-study. Some students may even consider pursuing their graduate degree abroad to attend a more affordable university.
Refinancing is an option that could help students with undergraduate loans reduce their interest rate. In the case when savings and federal aid isn’t enough to pay for grad school, private student loans may be an option. Private student loans may not offer the same benefits as federal student loans (like income-driven repayment plans or protections for borrowers facing financial hardship), so they are generally borrowed after all other sources of funding have been exhausted.
SoFi offers competitive rates on both refinanced loans and private student loans. Plus, borrowers who lose their job through no fault of their own may qualify for SoFi’s Unemployment Protection, which allows them to temporarily pause their loan payments.
Going to graduate school and want to learn about how loan refinancing could help you? At SoFi, pre-qualifying for student loans or refinancing is easy and convenient—you’ll get your rates in a matter of minutes.
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IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL SEPTEMBER 1, 2022 DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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