How to finance graduate school late in the game


FOR GRADUATE students, money habitually is in short supply. And by now, the pool of scholarships and grants to help ease that need for next school year largely is drained.

According to, a fee-based scholarship search engine, only about 20 percent of scholarships for graduate students carry deadlines through December. Still, several options exist, even this close to the start of the fall semester:

First, if you're working and attending school simultaneously, see if your company offers tuition reimbursement or tuition assistance. Most larger employers do: about 73 percent, according to a recent survey of companies with 5,000 or more employees by benefits consultant Hewitt Associates.

Generally, the reimbursement applies for studies related to your job or professional development, and up to $5,250 is tax exempt for you per year.

There is another tax break to consider. With the Lifetime Learning Credit, you can deduct up to $2,000 from your tax bill (or 20 percent of the first $10,000) for qualified education expenses, such as tuition, fees and books (but not room, board and transportation).

Although most scholarships already have been doled out, it's worth perusing free scholarship search engines, such as and, to look for any awards with summer deadlines.

A quick search on FastWeb, for example, produced several essay contests that offer from $500 to $3,000.

While some of these scholarships are designated for specific fields of study, others are open to just about any student. "These more general ones will get thousands of applicants," warns Baird Johnson, vice president of product and marketing for FastWeb.

With so much competition - Johnson says 1 in 3 college students uses the search engine - student loans may be more feasible, at least for the fall semester.

You can fill out the Free Application for Federal Student Aid through June 2006 for this academic year ( Interest rates, set every July 1, likely will be 4.7 percent during in-school, deferment or grace periods, and 5.3 percent during repayment.

Graduate students can borrow up to $18,500 in unsubsidized federal Stafford loans, which accrue interest even while you're in school. Of that amount, $8,500 may be a subsidized loan, which is interest-free until repayment, for students who qualify based on need.

If you've exhausted federal aid, most banks and financial institutions offer private education loans. One lender, the Access Group (, deals exclusively with graduate students.

Some employers may let you borrow from savings you've built up in a 401(k), typically half your vested balance, up to $50,000. You have five years to pay back the loan before taxes and penalties kick in, and the interest you pay is deposited to your account.

But tapping your nest egg should be a last recourse. You'll miss out on valuable compounding, and if you lose or leave your job the loan is due immediately.

Finally, plan ahead for the next year. Typically, graduate students find the most substantial financing through their academic department in the form of grants, fellowships and teaching or graduate assistantships.

Nonetheless, "It's very unlikely that someone is going to move to the front of the line for funding at this point," says Tim Lant, president of the National Association of Graduate-Professional Students.

Instead, concentrate on standing out this year. "The department heads and professors select the [teaching assistants]," says Erik Olson, senior editor of Princeton Review's Paying for Graduate School Without Going Broke ($20). "So you want to become friendly with professors and do really well in your courses."

E-mail Carolyn Bigda at

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