Should You Take Out Loans To Pay For Living Expenses In Graduate School?

I get lots of emails from readers who are either going back to school or considering it. Certainly, finishing

your degree or going on to get a professional degree can be one of the best investments you can make, provided of course you pursue a degree that meets the following criteria:

1. It’s in a field that’s in demand.
2. It allows you to command a higher salary than you could otherwise earn.

At the same time, you want to avoid getting an MBA just because you think you need it, or going to law school because you don’t know what else to do with your career. Graduate school should be a clear path to a more fulfilling career, a bigger paycheck, or (hopefully) both. Use our grad school ROI calculator to estimate the return on investment that grad school will provide.

Fortunately, more education usually equals better pay.

Over their lifetimes, college graduates will earn 1.66 times more than high school grads, according to The College Board. Those that obtain professional degrees will earn an average of 2.74 times more than high school graduates.

What these numbers don’t take into account, however, is the cost of obtaining those degrees. We all know that tuition rates are out of control and, for many, going back to graduate school will require taking out student loans. In the case of law school or medical school…lots of student loans.

If your degree of choice is obtainable by going to school nights while continuing to work full-time, you can save a lot of money. The downside, of course, http://paydayloansmichigan.org/cities/fremont is that it will take longer to get your degree and use it to leverage higher pay. Another potential disadvantage is that you won’t be able to focus 100% on either work or school.

Controlling living expenses while in graduate school

If you’re going to go to grad school full-time and are smart enough to be considering the financial impact of going to graduate school before you enroll, you’ll want to make a plan not only for how you’ll repay your student loans when you graduate, but how you’ll manage your living expenses and cash flow while you’re in school.

One way to reduce the amount of student loans you need to take out is to choose schools that have more competitive tuition rates and apply for grants and scholarships.

Otherwise, the best way to limit your total student loan debt is to reduce the amount of money you need to borrow for living expenses.

I haven’t gone to grad school, but my wife, Lauren, attended law school. Like many grad students, she financed her tuition with student loans and-although she worked summers and part-time during her 2L and 3L years-she had to borrow money for living expenses, too.

As I’ve written before, Lauren’s far more frugal than I, so she managed to live on the tightest of budgets during law school and minimize how much she needed to borrow. That-combined with choosing a lower-cost state school over a private school that cost more than double in tuition-kept her loan debts in check compared to what they could have been.

So how can you do the same?

The key is to visualize your financial life after obtaining your degree. Of course, you don’t have a crystal ball, but you can take some educated guesses. For example:

• How much total student loan debt will you have?
• What will your loan payment be?
• How long will it take you to get a job?