Your Guide to...Financial Aid for Graduate School

Financial aid is one of the biggest assets you have to help you make your way through graduate school. But navigating the different kinds of aid and the best practices for applying that funding can be tricky. As you plan for continuing education, we want to help build your financial aid literacy and share some of our best resources, as well as offer a few considerations to keep in mind.

Types of financial aid for grad school

1. Non-need-based financial aid, sometimes referred to as “merit-based aid,” is awarded according to a student’s academic performance, community activities, or athletic ability. It is commonly granted through Federal Student Aid's Direct Loan program, which provides unsubsidized loans from the government. These include Stafford and Grad PLUS loans, which accrue interest while you’re in school.
2. Need-based financial aid, as the name suggests, is based on your particular financial need and is commonly granted in the form of work-study, grants, and loans.

Each program’s financial aid office puts together a unique aid package, which could include a mix of federal, state, institutional, and private aid. When considering graduate programs, be sure to look into what aid is on offer for each school; this intel may help to inform your final decision.

Types of student loans

Before applying for financial aid, it’s important to know where your loans are coming from. Student loans are granted either by the federal government or from private entities, such as financial institutions or banks. 

These loan types can differ widely in terms of benefits, interest rates, and repayment plans, so it’s important for you to review all of the details carefully. Be sure to keep copies of all of your loan documents—especially your Master Promissory Note (MPN), which is the legal document you must sign in order to receive a federal student loan. By signing the MPN, you are agreeing to repay the loan according to the terms and conditions, whether you complete your graduate program or not.

The FAFSA 

Your “level of need” for need-based financial aid is determined by the Expected Family Contribution (EFC) from your Free Application for Federal Student Aid (FAFSA). The higher your EFC (how much you or your family are expected to contribute toward the cost of education), the less your calculated “need” will be, and vice versa.

The FAFSA calculates your EFC based on a combination of questions regarding your earnings for the previous year, and what you own. This can include real estate (including and in addition to the home you live in), trust funds, how many people live in your household, and number of dependents.

While the FAFSA takes many factors into consideration in order to determine your EFC, the relationship between all the questions can be generalized in the following way:

• Lower income = lower EFC = higher need
• Lower assets = lower EFC = higher need
• Greater household size = lower EFC = higher need
• If you are an independent = lower EFC = higher need

How is financial aid for graduate school different?

If you attended college in the U.S. you may be familiar with the FAFSA, but it’s important to note the differences in financial aid eligibility for prospective graduate school students:

• Regardless of your income or assets, you may still qualify for non-need based aid. A key difference, however, is that the interest may not be deferred—meaning that it will begin accruing even as you are enrolled in school. But don’t be discouraged; you can still get a guaranteed loan with a competitive interest rate that will help you pay your way through school without breaking the bank.
• All applicants are considered independent, which automatically categorizes them as higher need. Just because you are a working professional with a steady income doesn’t mean you won’t qualify for financial aid for graduate school. And although there is a limit to how much you can borrow per year, most graduate students are eligible for federal student loans through direct loans.

As you make your considerations about financial aid for graduate school, keep these points in mind:

• The financial aid package and process may vary from school to school. Everything from steps for applying to the opportunity to adjust your financial aid package may differ drastically across programs. To make sure you’re clear on the processes, ask admissions staff who you’ll be able to work with regarding financial aid. Get to know your contacts at each school, and make those connections early. The sooner these details can get ironed out, the smoother your enrollment process will be.
• Different packages offer different kinds of aid. Some may cover only what the EFC has determined as your need, while others will consider aid based on the full cost of attendance. Be sure to know all the details before accepting or committing to any aid package or loan.
• Your aid may be coming from different offices. Some financial aid offices may only be in charge of granting need-based aid, while the admissions office handles merit-based aid for students in a particular program. It is important to understand the variations in financial aid practices among schools so that you can minimize any potential frustrations or surprises once enrollment begins.

Appealing your financial aid package

Once you receive your financial aid details, look through them carefully and determine if there is anything you want to ask the school or institution to reconsider. 

You can appeal your financial aid package for a variety of reasons, including:

• You want less of a certain loan, (e.g., you want to decrease the amount of unsubsidized loans in your award).
• You want less of a stipend that includes a labor stipulation (e.g., you must tutor a certain number of hours per week in order to receive the stipend).
• You really want to enroll in a particular program, but got a better financial aid offer at another school. 

To appeal, get in touch with the financial aid office as soon as possible. Be sure to start by thanking them for the award, and then present them with your situation. Ask them what options—if any—there are to improve or amend your package and what they would recommend. If there is not much room for adjusting the aid you were offered, you may be put on a waitlist for federal work-study (assuming it was not already awarded to you).

Keep in mind that it might take time for the financial aid office to reconsider your situation. Stay on top of the process, but make sure to give them enough time to address any issues they might be working on.

Graduate school scholarships, fellowships, and other funding

Financial aid applicants at individual schools all vie for a slice of a finite amount of funding that is available for a given year. With those limitations in mind, you may choose to supplement your application for aid with the following:

• Apply for as much independent funding as you can. This can come in the form of grants, fellowships, and scholarships from sources outside of the school.
• Determine if your organization offers employer tuition assistance. These programs are typically managed through Human Resources, and can range anywhere from $500 to $40,000. Take note, however, that employer tuition assistance over $5,250 is taxable by the federal government unless the program is work-related education.

What to do about financial aid after you enroll 

Once you’re in graduate school, you’ll need to report any changes in your situation to the financial aid office as soon as they happen. This may include receiving outside awards or experiencing unforeseen economic hardship since applying for aid. Reporting changes immediately will allow the financial aid office to adjust your award package as necessary.

When reporting outside aid, keep in mind that it will not be added on top of your financial aid package, but will be re-calculated into your EFC. In general, if you demonstrate “need,” the financial aid office will try to eliminate loans that are unsubsidized and/or have higher interest rates.

Your financial aid award will depend on many factors, some of which you can change, and others you cannot. And while the process may be frustrating at times, remember that the financial aid staff are people too! Their job is to help you—and you can make it easier on them by applying early, applying for outside aid, and being professional, friendly, and appreciative in your interactions with the team.

If you’re still uncertain as to whether you can handle the expenses, even with financial aid, be sure to check out our post, Are you Financially Ready for the Cost of Graduate School?

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