Paying for Grad School

How to Get a Graduate Degree Without Going Broke

As a Returned Peace Corps Volunteer (Peru 2006–08), I very much understand the benefits and attraction of enrolling in a graduate degree program following the close of your Peace Corps service. 

Whether it was working in your community or living in your host country, some aspect(s) of your time volunteering likely gave you deep insight into what you want to do with your life and career. This clarity and the end of your service are two strong motivators to dive headfirst into the next phase of your life, and graduate school is often a great way to jumpstart the transition. 

In my case, working as a small business development volunteer unearthed a passion for building businesses and working internationally. So, for me, MBA programs felt like the right move. But knowing what I wanted to do wasn’t enough to make the grad school decision a done deal. 

In the fall of 2008, my fellow RPCVs and I were walking into a historic financial crisis that made job prospects unclear at best. When it came time to select a grad program, the cost to attend and the likelihood of getting a good job were the most important factors. 

I ultimately decided on the International MBA program at the University of South Carolina (Go Gamecocks!), and this was in no small part due to this type of return on investment (ROI) analysis I conducted. How much would I have to pay? Would it help me get a job I wanted or needed? 

While the financial crisis is a distant memory now, the ROI evaluation is still as relevant as ever, if not more so. For recent RPCVs who are wrestling with the grad school decision, your considerations should be the same: How will I pay for it and will the cost be worth it? 

Before getting into the how-to of paying for grad school and advice around how to do it responsibly, I’m going to do my best Peace Corps Director of Security impression and instill some much-needed fear into you. I hate to do it, but if you go wandering out into the grad school “bush” unprepared, bad things can definitely happen. 

To start, some scary statistics:

• $1.8 Trillion: This is the approximate level of the Student Debt Crisis in the U.S. (For comparison, this is the equivalent of the gross domestic product (GDP) of Australia or South Korea)
• 50%: The amount of this student debt held by people who attended graduate school. While the number of students pursuing grad degrees is far less than the undergrad equivalent, the aggregate debt burden on grad students is nearly the same.
• $90,000: The average debt incurred by students who attend grad school ($145,500 for law school grads)

The past two decades have seen a dramatic increase in the number of students pursuing a graduate degree, but also an even steeper increase in the associated costs and related student debt. 

What are the underlying factors behind these trends? 

An event at the College of DuPage teaches students fiscal responsibility

For starters, the perceived necessity of a graduate degree has increased significantly since the Great Recession of 2008. Between 2006–2022, the age of the U.S. population with a graduate degree nearly doubled, with this increase attributed to the tighter labor market and higher unemployment rates that came from the financial crisis. 

At the same time, the federal government introduced the Parent Loan for Undergraduate Students (PLUS) program for graduate and professional (i.e. law and medical school) students. Unlike undergraduate federal loans, the Graduate PLUS loan program does not include a cap on borrowing and students can borrow up to the full cost of graduate school with no guardrails. It doesn’t matter what kind of graduate program you enroll in and whether or not it will help your career prospects, the federal government will loan you the money to attend. 

In response to this loosening of the federal purse strings, colleges and universities across the U.S. reacted as any economist would have predicted: New grad programs sprouted up everywhere and schools jacked up the cost. Today, the average cost of graduate school is over $42,000 per year with some high-profile, nonprofit private schools often costing double that amount. Virtual programs are also popping up everywhere, with the associated cost not much lower than in-person programs. 

So, higher sense of urgency and necessity around needing to attend grad school: check.

Costlier programs in more fields to cater to this increased demand: check.

Ability to borrow in unlimited amounts with nobody standing in your way: check.

Sounds like a perfect storm for runaway grad degree debt. 

The Student Debt Cancellation Tour with Elizabeth & Ayanna saw Senator Elizabeth Warren and Congresswoman Ayanna Pressley drawing attention to the issue of student debt

But wait, there’s more!

There is another worrisome characteristic you need to be aware of: student loans are (nearly) impossible to get discharged via bankruptcy. Unlike most other forms of debt, student loans are excluded from a standard bankruptcy proceeding. While it is possible to get student loans discharged, the criteria to do so are strict and only in exceptional circumstances are debtors successful. 

Now the above is not an indictment on the federal government or specific loan programs, although there are certainly common-sense things that should be changed to protect consumers. What this is intended to do is demonstrate the cautionary tale against jumping into graduate school without considering the repercussions. Yes, a master’s degree can accelerate your career and open up new, lucrative job opportunities. But this path is not as direct a line as it historically may have been and understanding the risk is paramount. 

Ok, understood. So how can I get a graduate degree and avoid burdensome debt?

To avoid landing in the student loan quagmire, there are some steps you should take and avenues to consider.

Step 1: Calculate the expected ROI of each specific program you’re considering

• Understand the job prospects

1. 1. 1. General: What positions open up with a grad degree in your field?
      2. Specific: Which companies reliably recruit out of the program and what positions do graduates land?

• Calculate the full cost of attendance (COA)

1. 1. 1. COA = tuition, living expenses, fees, books, academic trips, etc. 
      2. Estimate your monthly payments based on expected loan terms

• Estimate your future earnings

1. 1. Estimate your first-year earnings based on job prospects above and compare your current salary vs your anticipated salary
   2. Subtract your estimated annual loan payment from the increased salary to determine how much extra income you could actually take home each year

Simple ROI Calculation: Future Salary – Current Salary – Loan Payments = Expected Return

The above math should be your first step in minimizing burdensome student debt because the simple fact is a graduate degree may not be necessary or worth it for you. Said another way, the “Expected Return” result may be minimal or possibly even negative. 

Pursuing a graduate degree should be a financial decision as much as a personal career decision. The benefits of a graduate degree are not as clear as they once were and having clear line of sight on the literal payoff should be the first thing you sit down and figure out. 

Step 2 – Look into options to lower the cost

1. Paul D. Coverdell Fellows Program: As an RPCV, your first stop should be looking into schools that participate in the Paul D. Coverdell Fellows program.
2. Fully Funded Programs: Some colleges and universities offer select graduate students free tuition and a monthly stipend in return for teaching or research assistantships.
3. Scholarships & Fellowships: State governments, schools and private organizations may provide scholarships or fellowships for academic excellence or in exchange for research assistance; other factors, like studying in high-needs fields or increasing diversity, may also influence candidacy.
4. Grants: Fill out the Free Application for Federal Student Aid (FAFSA) form to see if you qualify for federal, state-based, and school-specific grants. There are far fewer need-based grants and programs than for undergraduate degrees, but some, like the Teacher Education Assistance for College Program (TEACH), are available for grad students.
5. Employer Tuition Assistance: If you are looking for a graduate degree to pursue a career in a particular field, look into tuition assistance programs at relevant employers. These types of assistance programs are growing in popularity and are a great way for employers to compete for top talent, which we all know includes RPCVs.
6. Consider overlooked, “less sexy” schools and programs: While the “brand name” colleges and universities garner a lot of attention from employers and applicants, many great overlooked programs end up giving away meaningful merit scholarships to compete for qualified applicants. For some fields, having the sexy brand on your degree is also much less important, so look around at lower-profile programs that may give great merit scholarships. These may offer a much better ROI for your situation and goals.

Step 3: Borrow Smart

• Responsible borrowing limit: Your cumulative student loan amount should be no more than your expected first-year salary after graduation. This is a great benchmark to keep your borrowing from getting out of control.
• Consider different loan options: Not all loans are created equal, and you should evaluate these factors before choosing which one is right for you.
  • Interest rate: Rates are the highest they have been in decades and the variance between lenders can be significant. Federal loans like the Direct and PLUS programs offer similar rates for all borrowers, but these rates may be much higher than a private lender could offer you. 
  • Origination fee: Federal loans typically come with a 4%+ origination fee that is added to the loan amount. Private loans often do not have one, so consider this cost in your calculus. 
  • Repayment flexibility: Federal loan programs have repayment flexibility and potential forgiveness options that private loans often do not. These are most helpful if you should run into trouble with your loan servicing at some point, which hopefully you avoid. But it is something to consider as well. 

I attended grad school the year after I became an RPCV and it ended up being a great decision for me. I have to admit, however, that it was not an obvious choice at the time, and it was based on both feelings of excitement and necessity. While I was energized and motivated to start living my post-Peace Corps life, the prospects of landing a job I wanted, deserved, and needed were precarious at best. Many of you reading this may feel the same way as you re-enter the “real world”. 

If you’re seriously considering graduate school, my parting advice would be to first and foremost perform a comprehensive, true reality-check assessment of what career and jobs you will be qualified for and likely to get with your targeted graduate degree. Know which employers recruit at the schools you’re considering and the jobs graduates typically get. You can do this homework before you apply and certainly before you sign on the dotted line to attend. 

And if you have to borrow, do not do it recklessly. Just because you can find someone to lend you money (which you will), that does not mean you should borrow it. Have your focus locked in on that expected first-year salary and keep your borrowing appropriately restrained under that figure. 

I hope your Peace Corps service was as rewarding and enlightening as mine. I also hope you’re able to carry your experience and knowledge from your service into the next phase of your lives. If that next phase is graduate school, best of luck with your search and applications!