How to Financially Prepare for a Master’s Degree
Advanced degrees help advance your career. Not only does a credential like a master’s degree provide you with superior skills and knowledge, but employers often prefer to hire master’s degree holders, especially in more senior positions that offer more interesting responsibilities and opportunities. Perhaps best of all, a master’s degree provides the most significant bump to your earning potential, increasing your salary by up to 87 percent and ensuring that you will out-earn a bachelor’s degree holder by almost $1.5 million over your lifetime.
So, why doesn’t everyone pursue master’s level education? The answer is simple: cost. Though most master’s programs last two years or less, they are much more intensive for schools to provide to students, which means that they cost students much more in tuition. In fact, though only 25 percent of student loan borrowers have graduate degrees, their student loans account for more than 50 percent of all student debt in America.
If you are interested in achieving a master’s level education, you need to financially prepare for it. Here are a few tips and tricks for getting your finances in order, so you can thrive in your graduate program and unlock the advantages of a master’s degree.
Choose Your Program Wisely
Higher education can be the best decision for your career — or it can be among the worst. It would be a shame to be saddled with any amount of student loans and waste several years pursuing a degree that does nothing to boost your earning potential or escalate your career position. Therefore, you need to be careful to choose a degree program that is known to have a positive impact on your prospects. You should consider your current qualifications as well as your career goals when making this decision. For example, if you are already in accounting, you can boost your career with a MAcc degree, but a master’s in fine art might be less practical.
Additionally, you should compare costs associated with different programs. Different universities have different tuition schedules for different types of students; if you are pursuing a master’s degree as an out-of-state student or at an ivy league school, you should expect to pay more than you would if you attended an in-state institution. You can contact admissions departments to find out more about tuition costs before applying to programs you might not be able to afford.
Contribute to a 529 Plan
A 529 is a state-sponsored investment plan that helps individuals save money to pay for education expenses. Like a Roth IRA, you pay taxes on the money before you place it in your 529 savings account, where it can grow based on the investments you make. Then, when you need to pay education-related expenses, you can withdraw from your 529 tax-free. Financially savvy parents start 529 savings accounts when their kids are young to maximize the growth potential, but you can start your own 529 any time.
Apply for Various Financial Aid
Universities, companies, non-profit organizations, government agencies and more offer all sorts of programs to help students achieve the higher education they need to thrive. You should look for grants, scholarships and fellowships designed for graduate students. Many financial aid options are need-based, but some are merit-based, so you may need to dazzle the provider with your application materials. You can search for financial aid programs online or through the student services department of your school.
Ask Employers for Support
If you are planning to maintain a professional job during your graduate program, you might ask your current employers whether they would consider covering some of your tuition costs. Education benefits are rising in popularity as they benefit not just employees but companies, which gain easier access to satisfied workers with greater knowledge and skill. Though your employer is not likely to cover your entire tuition and fees, when paired with any of the other solutions above, you might be able to graduate close to debt-free.
Compare Student Loan Options
Graduate school is expensive, and unless you receive a full-ride or have incredible savings, you probably will need to take out some student loans. Many students automatically choose to take federal student loans, which take into account a student’s income when developing repayment plans and offering forgiveness. And, for graduate students, there is no limit to the amount of federal student loans you can take out. Still, you might consider private student loan options, especially if you expect to earn a high income after graduation. Private loans can come with much lower interest rates, so if you can pay them off quickly, they might be a better deal.
Almost regardless of your career field, you can benefit from an advanced degree. Fortunately, with some preparation, you can earn a graduate degree without drowning in debt, allowing you to thrive in your career after graduation.
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