Earning a doctoral degree often requires a significant commitment of resources.
However, you shouldn’t let tuition figures stop you from achieving your goals. With some time and research, you can create a smart finance plan that may even include ways to reduce your overall educational expenses.
Alana John, a financial aid counselor from Capella University’s Financial Aid Office, suggests a six-step plan to budget for your doctoral degree journey.
Step 1: Submit your Free Application for Federal Student Aid (FAFSA) for the upcoming year.
Completing a FAFSA allows you to see what federal financial aid you qualify for. This includes work study and federal loans.
Alana says having your FAFSA completed before speaking to a university financial aid counselor streamlines the process. Knowing exactly what you qualify for helps you and your financial aid counselor determine how much extra you may need to borrow.
Step 2: Know your maximum loan amount.
All loans have specific requirements, including a maximum borrowing amount. As a graduate student, you can borrow up to $138,500 in Federal Direct loans. Once you reach the graduate level, you can only borrow Federal Direct unsubsidized loans up to the lifetime aggregate limit. There is also an annual limit on Federal Direct unsubsidized loans of $20,500 per aid year.
Alana warns to be careful with these limits. “If you qualify for the maximum amount, don’t immediately jump into borrowing that much,” she says. “Understanding how much you could take out will help you create a prudent plan for borrowing what you cannot cover out-of-pocket.”
Step 3: Research non-loan options.
Alana suggests imagining your financing as a bucket. She tells students that as much of the bucket as possible should contain non-repayable financial aid, such as a scholarships, Federal Work Study, or employer reimbursements. The rest of the bucket should be topped off with loans as a last resort.
Searching for scholarships, grants, and other non-repayable funding before taking out a loan can help reduce your total borrowing cost. For example, you may be eligible for a tuition discount through an affiliation your employer has with your university, through military service, of if you have a degree from an affiliated college.
Step 4: Understand what you will need to borrow.
Once you’ve found any non-loan options, you’re ready to calculate the total amount you’ll still need.
“When figuring total cost, remember to total direct and indirect costs,” says Alana. Direct costs are tuition and fees, while indirect costs range from living expenses to transportation to Internet fees.
Subtract the amount of non-loan funding you qualify for, along with any out-of-pocket contributions you can make, from the total amount you’ll need. This will help you determine how much you extra you may need to borrow.
Step 5: Figure out repayment plans.
Now that you’re ready to explore your loan options, it’s important to compare repayment plans you might qualify for. Depending on the provider, you may have options as to how you can repay. From graduated to income-based repayment, you can determine what’s best for you.
“Some loans have a six-month grace period after graduation,” explains Alana. “Once that period is over, you will be responsible for monthly payments. Think about how much you can realistically afford, and choose the loan repayment plan that works best for your budget.”
Alana recommends using the repayment estimator at studentloans.gov to help you determine your payment plan.
Step 6: Decide if it makes sense to borrow to fund any remaining costs.
Once you’ve done your research, it’s time to determine exactly how much you want to borrow.
“Be in the driver’s seat,” Alana says. “Understand what you have and what you want to borrow. What does this look like for your future self?”
If your monthly loan repayment will be a burden on you, reconsider. Creating a budget of your expected expenses and income, and then weighing it against your loan repayment, can help you build a feasible financial plan to pay for your doctoral degree.