How to minimize your grad school debt

If you or a loved one will be headed to graduate school this fall, chances are you are worried about more than dorm survival. Instead, you may be wondering how to avoid six-digit student loan debt. It's a valid fear — no one wants to end up where I started.

Fortunately, there are ways to earn a graduate degree while avoiding financial catastrophe. Using myself as an object lesson, here are some strategies I would recommend:

Reverse-Engineer the Problem

Consider the degree you are interested in and ask yourself some tough questions: How easy will it be to find a job with that degree? Will you have to make other types of sacrifices to get a job in that field, like having no control over where in the country you will live? Are you willing to make those sacrifices?

Don't forget to ask yourself what the average starting salary is for entry-level positions in your proposed profession. From there you can work backwards to figure out what your net (take-home) pay will be.

Then assume basic living expenses, catch-up contributions to your retirement account, and some fun money. Once those are accounted for, how big of a student loan payment will you be able to comfortably afford? Don't forget repayments on any loans from your undergrad days!

Explore Different Options

If you don't like the numbers you are crunching, you have some options:

  • Choose a different career path that requires less education or that has a better return on investment (ROI).

  • Find a way to get the same education for less money.

  • Find a way to earn more money while pursuing your education.

Let's focus on the latter two.

Typical Ways to Get the Same Education for Less Money

In this category, you will find a variety of fairly traditional frugal hacks, such as:

  • Living with parents

  • Living with roommates

  • Finding a full-time job that offers tuition benefits

  • Choosing a public university that will meet your needs, preferably where you are eligible for in-state/resident tuition

  • Learning how to cook and save on groceries

Insider Tip — How to Get the Same Education for Less Money

Most of the items on the list above are fairly self-explanatory. However, there are ways to save money on graduate school that are more creative and seldom discussed. These insider tips are where bigger savings lurk, but bigger sacrifices may be required to get those payoffs. (I know. How typical.)

Graduate on Time

Resolve to graduate on time. This is easier said than done. On paper, most PhD programs take five years to complete. However, according to statistics from the Survey of Earned Doctorates, a federal agency survey that gathers information from research doctorate graduates, in 2013 the average time to degree (TTD) for graduates in the physical sciences was about six and a half years. In life sciences, the average TTD was closer to seven years compared to almost eight years in the social sciences and over nine years in the humanities.

What does this mean for you? Manage your time wisely. Say “no” to opportunities that sound intrinsically rewarding but won't advance your studies. Don't change your research focus halfway through the program or refuse to defend a dissertation that isn't perfect. (Pro tip: Your dissertation will never be perfect.)

Be Willing to Reconsider Your Direction

If you find that you are really unhappy in your program and/or realize that you are not cut out for graduate school, leave. ASAP. I mentioned this in a previous article on #StudentLoanDebt, but it bears repeating:

  • According to the Chronicle of Higher Education, Ph.D. programs have approximately a 50 percent attrition rate.

  • Only half of Ph.D. attrition in humanities programs takes place by the third year. The other half leave after Year 3 but before Year 10!

There is no shame in acknowledging that your talents lie outside academia. Don't fall victim to the sunk-cost fallacy. Get out of grad school and find an arena in which your skills shine!

Find a Way to Earn More Money While Pursuing Your Education

Again, there is the typical advice for how to earn more money:

  • Being a TA or RA (usually this comes with a tuition waiver, stipend, and student health insurance)

  • Getting a second job/summer job

  • Starting a side gig

  • Selling items you no longer want or need

However, most of these tips have been covered before, here or elsewhere. Additionally, in the graduate school setting, some of them may actually be counterproductive. Let's say that you can earn an extra $3,000 a year at a second job but that job takes up so much time it takes you an extra year to finish and doesn't make you more competitive for postgraduate positions. That is not a good use of your time! Yet in the moment, it might be difficult to see or acknowledge this.

Insider Tip — How to Earn More Money While Pursuing Your Education

Less often emphasized are money-making opportunities that are unique to graduate school and/or academia. One example is applying for departmental, university, or professional organization travel grants to attend conferences. That way you can take advantage of networking opportunities on someone else's dime. Similarly, small seed grants for pilot research can help keep your TTD in check and make you more competitive for large, prestigious grants in your field later on in your program.

Not only do these types of activities offset the cost of graduate school while you are there, they help you finish faster and may increase the odds that you will get a job once you're done. Not only that, but the beefier your CV is, the more bargaining power you will have when you negotiate your salary and the other terms of a job offer. Now that's a win-win-win!

And while student loans can be a postgraduate burden and certainly can't be considered “income,” that doesn't mean you should take them off the table completely. If used strategically, the ROI for student loans can be real. Let's say that taking a $10,000 student loan during Year 5 will allow you to not only defend your dissertation on time, but also revise two chapters into articles for publication, which helps you land a tenure-track job. On the other hand, not taking the loan and continuing to TA may add two years to your TTD, during which time you publish nothing. What do you think the odds of landing a tenure-track job are in that circumstance?

What strategies do you think are helpful for those hoping to minimize grad school debt? Share your advice in the comments below!

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Beth
Beth
5 years ago

This article has lots of good tips but seems to assume the audience is all going to pursue PhDs and go into academia. I did it to change careers and get ahead in my new career. Here’s how I did it: – I only completed as much education as would bring me a good ROI. Not sure what it’s like in the U.S., but in Canada you usually complete a Masters before applying to a PhD program anyway. In my field, a PhD is actually a disadvantage — certainly not worth an additional 4-5 years out of the workforce. –… Read more »

Honey Smith
Honey Smith
5 years ago
Reply to  Beth

I agree a master’s degree is enough for most careers. However, I think (like it sounds like you did) you should work long enough to figure out whether a master’s is needed at all, and if so which one. At the university where I worked (and which is pretty representative), however, master’s students were not eligible for university or departmental funding, INCLUDING TA and RA positions. The (never formally articulated anywhere) thinking was that PhD students expected support and competitive/highly ranked doctoral programs required it. MA students were the saps who had to pay their own way, unfortunately. I don’t… Read more »

Beth
Beth
5 years ago
Reply to  Honey Smith

Sounds like it’s very different here, though it depends on the program. Definitely worth finding out if funding and work opportunities are the norm in your field and your region.

JK
JK
5 years ago

Honey is writing about how to avoid student loan debt? Really? is there a student loan she and husband HAVEN’T taken?

Honey Smith
Honey Smith
5 years ago
Reply to  JK

No one knows better than me how to avoid my mistakes!

Laura
Laura
5 years ago
Reply to  JK

Not sure what constructive advice JK’s post is supposed to be bringing to this conversation.

Adam Building the credible web
Adam Building the credible web
5 years ago

Nice effort by the author to give few valuable tips, but question here why in the World only super power,largest economy education is becoming a trading commodity, people are encouraged to calculate ROI and choose the field with highest ROI. What about your aptitude, what about your favorite subjects, what about nation building, what about the need of hour, what about more and more people graduating only in high ROI areas, what about other skill sets required by the economy which are not directly affecting or contributing to the economy but without that the whole system can collapsed. Its time… Read more »

Honey Smith
Honey Smith
5 years ago

I certainly agree the system is broken. However, unless/until it’s fixed by legislation, etc., ROI is the only way to make sure you aren’t taken advantage of.

I chose my PhD based on my own aptitude, intrinsic value, and desire to improve society. I graduated with six-figure debt that can’t be discharged in bankruptcy and spent 7 years working outside my chosen field making only $40K/year because it was the only job I could find.

Beth
Beth
5 years ago
Reply to  Honey Smith

To be fair, years ago you would have based the ROI of your degree on your predicted career path not what actually happened. $100K of debt looks very different if you can expect to earn nearly six figures than it does if you earn $40K. Maybe when you started you would have moved out of state or out of country where there were jobs. But life happens. Quite a few of my friends dropped out of PhD programs because they wouldn’t be able to move to another province or country where there were jobs. The ones I know who full… Read more »

Erin
Erin
5 years ago

While it sounds pretty brutal to choose a career path based on ROI, I think we all know that will never be the only consideration. After all, the ROI for the average doctor might be quite good, but the ROI for a really very bad doctor (which is what I’d likely wind up as if I pursued that) is terrible. So, I’d consider ROI as one piece of data within a larger picture that includes the other things you mentioned. What I think ROI is great for though, is mitigating expectations. I got an MFA, and I think we can… Read more »

Sam
Sam
5 years ago

I obtained my advanced degree as a full time student. But I minimized my student loan debt by doing the following. (1) Obtained scholarship/fellowship money that paid for about half. (2) Worked both summers. (3) Only took as much student loan as I thought I might need. Do not take the maximum, take the minimum. Yes you might have to scramble, I ended up borrowing a bit from family. (4) Don’t go to Europe on your loan proceeds. Seriously, I know tons of people who had “left over” student loan money and spent it on trips to Europe, those people… Read more »

Michael
Michael
5 years ago

Sam has some great tips, especially the one about not taking out more than you actually need because that money is not free. For those just starting to look at grad school, I would recommend applying, and seriously considering, your “safety schools,” especially ones in the area you want to end up. The reason I say this for a couple reasons: 1) If it is your safety school, you probably have test scores/grades in the upper range of the 25/75 split, which the school will want to boost their standing. As a result, they are much more likely to give… Read more »

Honey Smith
Honey Smith
5 years ago
Reply to  Michael

For law and business, your advice holds true to what I’ve seen. For PhD programs, generally speaking it is almost impossible to get a job in the city (even state) where you earn your degree. You have to be willing to move. So find out what is typical for that type of degree.

Ali
Ali
5 years ago

Some good suggestions! I decided to complete my MBA part-time so that I wouldn’t lose two years of income. My employer also paid for part of my tuition. And of course part-time education costs a lot less overall because living expenses aren’t wrapped into it. I paid less than $80k for my MBA (still a LOT of money), but if I had gone full time I would have paid at least twice that and had years of lost income.

Sylvia @ Professional Girl
Sylvia @ Professional Girl
5 years ago

I am currently taking my last course and then I will be done with my master’s. I have been fortunate enough to have an employer that will pay for my courses. So to graduate with a Master’s I paid a grand total of $500. I still live at home but I do have debt, so the money I saved I put towards that.

Laura
Laura
5 years ago

Honey’s article is excellent; while there’s lots out there about avoiding/reducing student loan debt, most of it is geared towards undergrads. And while some/most of the advice is the same, grad school does have slightly different circumstances as noted.

I’d also suggest that unless you know you need a specific degree to advance in your chosen field, if you are still deciding on a direction, try online courses to see if it’s something that sets you on fire or puts your fire out. It’s a cheaper method with less commitment to explore a particular path.

K
K
5 years ago

While Honey has made several good points for non-clinical advanced degrees, several do not hold true for more lock step clinical degrees. Often times there is little to no scholarship money available for there programs and students are either strongly discouraged or prohibited from working outside of school. These programs also can run year round with limited time off making a summer job nearly impossible. Who wants a 2 week long employee? Additionally, lock step programs make it impossible to add on credit hours to complete the curriculum in a shorter time frame.

Honey Smith
Honey Smith
5 years ago
Reply to  K

All that’s true. However, most lock-step clinical programs have an ROI that will easily offset those startup costs – IF you are top of your class.

Honey Smith
Honey Smith
5 years ago

Karen Kelsky, head of the consulting service The Professor Is In, makes a living helping PhDs and late-stage doctoral students navigate the academic and non-academic job markets. I’ve had conversations with her about her services, and highly recommend them if you’re at the job-seeking stage of your graduate or postgraduate career. However, when it comes to doctoral programs, that means the time to start considering the job market is before you even start your program. Fortunately, Kelsky’s book detailing strategies for approaching grad school strategically, also called The Professor Is In, comes out in August. She sent me an advance… Read more »

lhamo
lhamo
5 years ago
Reply to  Honey Smith

Karen at TPII also offers tons of ABSOLUTELY FREE advice through her website/blog/free newsletter and her regular columns in The Chronicle of higher education. A must read resource for anyone contemplating or already enrolled in graduate school. http://www.theprofessorisin.com And sometimes you just need to put your love for a field aside for a minute and look at what is really practical/feasible. I spent 8 years to get an MA/Ph.D in anthropology, but the only way I was willing/able to do it was that I secured an NSF fellowship for my first three years, which then helped lead to other funding… Read more »

LMBrown10
LMBrown10
5 years ago

An additional alternative: I worked full-time during both my master’s degree (Master of Public Health) and my PhD (Health Services Research). Now I wasn’t able to attend a tier-one university with this type of set-up, but my employer (a large healthcare organization) paid for my education, and was flexible with my working hours. This did require quite a bit of sacrifice (physically, emotionally, working on weekends/holidays, and with a lower tiered education), but upon completing my doctoral studies I had six years of full-time working experience and no student debt from graduate school. My trade off was a lower tiered… Read more »

freebird
freebird
5 years ago

I earned a doctorate in engineering about 25 years ago, and maybe things have changed since then, but what I remember was that (1) fellowships were the best source of funding for graduate school, they usually pay well and the most competitive ones have cachet (2) research assistantships are another way to get a free ride– but beware the conflict of interest between you and your professor in terms of the duration of your service (3) teaching assistantships are least desirable because the time spent is a distraction from your main objective, but the skills gained from that experience often… Read more »

Erin
Erin
5 years ago
Reply to  freebird

Not only have things changed since you went to school, but that sort of thing varies WIDELY by discipline. STEM fields are some of the best funded, and other fields that are valuable in specific situations receive little or sometimes even no funding at all.

Susan
Susan
5 years ago
Reply to  freebird

EVery PhD program I applied to in the Biomedical Sciences offered full tuition coverage and a stipend. Some required you to TA, others did not. The program usually covered the expenses the first year, and the PI would cover the remaining years. Then, of course, since you were trained and cheap labor it became hard for the PI to want to let you graduate. There are many of these programs in the STEM fields. You won’t get rich, but if you finish quickly and move on to an industry or government position it is a great option for pursuing a… Read more »

Grace @ Online Stock Trading
Grace @ Online Stock Trading
5 years ago

I agree with Ms. Hone Smith, there are many ways to minimize to grad school debt, but, for sure, the ones written at GRS are effetcive. Thanks for this tips. Shared!

Harmony @ creatingmykaleidoscope
Harmony @ creatingmykaleidoscope
5 years ago

I will be paying back student loans for a long time. In retrospect, there are a number of things that I would have done differently to decrease the amount of my loans. While I always worked during undergrad and graduate school, I would have taken out less “living money.” You should really try to minimize your expenses so you’re not enjoying too many extras (ex, spring break) with loan money. Also, sell back your books. I kept a lot of my books under the misguided assumption that they might be useful someday. You don’t use them again. Now, I have… Read more »

Isabelle Rozn
Isabelle Rozn
5 years ago

As a current undergrad student about to graduate and (hopefully) take on grad school, I found this article helpful because it reminded me that it is possible to go to grad school without drowning in debt. Thanks for posting Honey!

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