How to Save for Graduate School

Earning an advanced degree can help boost your career and potentially lead to a higher salary. But, graduate school is expensive, and students who aren’t prepared for the costs could end up in serious debt.

How much does graduate school cost?

Total graduate school costs vary by the type of college and degree and whether the student commutes or lives on campus. Students who live on campus could end up paying more than six figures for a graduate degree.

Cost should be an important factor when selecting a graduate school program, but cheaper isn’t always better. Students should consider their career goals first, and look for the program that best prepares them for their job.

The cost of medical school is generally much higher than the cost of other graduate school programs. The American Association of Medical Colleges (AAMC) reports that the average cost of tuition and fees and health insurance in 2018-19 is $36,755 for public colleges and $59.076 for private colleges for state residents.

Average Cost of Graduate School 2018-19

Source: CollegeBoard Trends in College Pricing 2018

Note: These costs do not include the cost of medical school, which may be much higher.

Alternatives to full-time graduate school

Attending graduate school part-time while working can help students offset some of the costs. However, it may take longer to complete a degree when attending graduate school part-time, since you will be earning fewer credits per semester.

Some graduate school programs may be available online. In most cases, online graduate courses cost less than traditional graduate school classes and give students more access to different programs and courses.

Married students sometimes have one spouse work while the other goes to graduate school and then trade off.

Using a 529 plan to save for graduate school

Most graduate and professional schools are considered eligible institutions for 529 plan purposes. To find out if a particular school is eligible, students may use the Federal School Code Lookup.

Families may use leftover funds in a child’s 529 plan to pay for graduate school, or the student may open a new 529 plan to save for graduate school. Students who open a new 529 plan for graduate school should keep their shorter investment time horizon in mind when selecting investments and stick to more conservative options such as bonds, money market funds and FDIC-insured investments.

Funds saved in a 529 plan grow tax-deferred and may be withdrawn tax-free when used to pay for qualified education expenses. Graduate school students can boost 529 plan savings by reinvesting 529 plan state income tax benefits (if available), earning rewards through Upromise. 

Graduate school students may use a 529 plan to pay for tuition, fees and other graduate school expenses, including:

• Books, supplies and equipment required for enrollment or attendance

• Expenses required for a student with special needs

• Computers, software and internet access

• Room and board if the student is enrolled on at least a half-time basis

Paying for graduate school

It may be impossible for some students to save the entire cost of graduate school. Students who are trying to fill a savings gap should apply for financial aid and consider the following ways to bring down costs:

• Student Loans. Federal and private student loans are available to pay for graduate school expenses. Students should consider their return on investment and limit their total student loan debt to no more than the average starting salary for their occupation. It’s always best to avoid student loan debt. Federal loans often offer superior benefits over private loans. If you decide private loans are right for you, check out our objective list of the best private loans for graduate school.  
• Scholarships and Fellowships. Graduate students can explore free scholarship search sites such as Fastweb and GoGrad, and also look for opportunities through government, corporations and private organizations.
• Federal Work-Study. Students may use earnings from a Federal Work-Study program to pay for graduate school.
• Assistantships. Teaching Assistantships and Research Assistantships provide a full or partial tuition waiver along with a small living stipend in exchange for performing teaching or research duties.
• Employer-paid tuition assistance. Many employees offer tuition assistance for continuing education. Employees can exclude up to $5,250 of employer-paid tuition assistance from federal income taxes each year.
• Education tax credits. The American Opportunity Tax Credit is limited to four years of postsecondary education, but graduate students may claim the Lifetime Learning Tax Credit for qualified graduate school expenses.

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