If you are planning to go to graduate school, there are a couple of financial adjustments that you need to make. This is necessary not just to survive it, but to also come out of it with your finances intact.
Grad school can take a lot from you – not just in your finances. It can be very demanding when it comes to your time. It can also drain your knowledge and skills. Contrary to what you went through when you were an undergraduate, more is expected of you when you go to grad school. You will be given more control in the learning process. You should expect to go through more research, paperwork and self exploration. You need to be prepared to exert more effort – maybe much more than what you gave when you were an undergraduate.
But probably more than all of this, going back to school can have a huge effect on your finances. Did you know that paying for grad school is a lot different than going to college as an undergraduate?
According to a study published on Amazonaws.com, about 40% of the total student loan debt was disbursed to graduate and professional students. This study cited an example. One professional has a total of $60,000 in debts. She owed $10,000 on her undergraduate studies. The rest – $50,000, was because of her graduate studies.
The bottomline here is this – your grad school could cost you a lot of money if you are not careful. It is more costly – at least if you do not have the right employment or financial situation. In order to avoid this, you need to make a few financial adjustments before you go to school. If you prepare for grad school the right way, it might not cost you a lot of money. Not only that, you can still get the higher credentials that will allow you to earn more money in your chosen field.
How to prepare your finances before you go to graduate school
A lot of people opt to go to graduate school because they want to improve their finances. It is actually a sound plan and it can give you all the potential to earn more. However, you need to prepare for it ahead of time. The longer your prepare for it, the more secure you can be.
So what are the financial adjustments that you can do before entering grad school? Here are three things that you need to work on.
Find ways to avoid student loans.
It is true that you can go to school even if you do not have any money. You can simply apply for a loan and worry about the payments later. After all, grad school will help you earn more right? Well this is the very mindset that could destroy your financial future. First of all, you should be careful about borrowing money with a repayment plan that is dependent on something that is not guaranteed. Your graduate studies could help you earn more in the future – but that is not a guarantee. What if you finish school and the unemployment rate is high? You might be unable to get the higher paying job that you are hoping for. Another thing that you need to remember is that saving is always better than borrowing. You do not have to waste your money on interest rates. But even if you do not have enough time and money to save, you need to understand that there are things you can do to keep student loans from ruining your finances. You can improve your credit score so you can get great terms on your loan. If you are currently employed, you may want to ask your employer if they have a program that can help pay for your studies. You can sign a contract to stay with the company for a couple of years and in return, have a portion (if not all) of your educational expenses shouldered by your employer.
Lower your budget.
Depending on your employment arrangements while you are in grad school, you may have to lower your spending budget because of limited resources. Some people have to stop working completely. Some can manage to work part time. Others can afford to continue with their day jobs. Regardless of your particular situation, you have to know that your expenses will be higher when you start your studies. You need to pay for your school and the materials that are required to complete your education. You may also have to spend more on a laptop and other devices that can make your studies easier for you. Think about these expenses because you need to spend for them. If there is no increase in your income or there is even a decrease, then you have to lower your budget for other spending categories. That way, you can allocate a budget for the priority expenses that you have during your grad studies. This is probably one of the most helpful financial adjustments that you can make.
Know everything about student loans.
It is wrong to think that you need to borrow high student loans to get a high paying job. However, if there is no helping and you really need to borrow money to go to grad school, then go ahead. Just make sure that you will research everything there is to know about it. Start by understanding the options that you have. If you belong to a particular industry or sector, you may be entitled to receive financial help. Apart from knowing your option, you should also understand the repayment plans that you can use after you graduate. This is so you can make plans as early as now. Analyze your ability to pay off your loans before you finalize the type of student loan that you will borrow. When you are sure about your payment plan, then you can finalize the application for your student loans.
These three are important financial adjustments that will allow you to secure your net worth as you go through grad school.
3 financial truths about going back to school
As you are preparing for graduate school, you need to be open-minded about what you will go through. There are three important financial truths that you need to keep in mind about the higher education that you will take on.
Finishing a graduate study will not automatically mean a higher pay.
We have mentioned earlier that going to graduate school will not guarantee a higher pay for you. What it can do is to improve your knowledge and skills so you will be more qualified to get a high paying job. Getting that job and the bigger salary will be all up to you. If you were able to afford to go back to school because your employer gave you financial assistance, you may be expected to stay with the company without raise for some time. Do not think that grad school will automatically allow you to receive a bigger income. That will come later.
Working while in graduate school may not be as rewarding as you thought.
Another thing that you need to think about as you make your financial adjustments is that working while you are attending graduate school may not be as rewarding as you think it is. Even if you have previous work experience, you need to understand that you are currently considered a student. That means the part time jobs that you will get while studying will not get you the same benefits as you would as an employee. According to an article published on TheAtlantic.com, people are protesting that graduate students live in poverty because they are not given fair compensation just because they are technically, students. This is unfair but is still being practiced. You may want to consider this if you are thinking about quitting your day job so you can attend to your studies.
Your student loans could cripple your finances if you borrow too much.
The last truth that you need to think about involves your student loans. While it is ideal that you avoid getting a loan, there are instances when you really need to borrow money. This is why you need to make financial adjustments to help you pay for at least a portion of your loans in cash. This is okay as long as you are smart about it. Do not borrow more than what is really needed. An article published on USNews.com explained that student loans for graduate and undergraduate students differ. Graduate students are said to have better chances at borrowing because they have credit scores. Not only that, they already have experience in borrowing student loans – at least, if they used it to finance their undergraduate studies. While this may be true, you also have to understand that graduate students will not have as much financial aid available as undergraduates. This means you will not qualify for some of the best Federal student loan programs. It could put you in danger of borrowing too much just to get through graduate school. If you are not careful, you may find yourself taking on too much loan. This can compromise the salary that you get when you re-enter the workforce.
These truths should hopefully, help you strengthen your financial position before you go to grad school.
Of course, there are other things you need to prepare for that are beyond the financial adjustments that you have to make. Here is a video that has a lot of tips from fellow graduate students.