Financing Graduate School in Psychology

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For many of you who are psychology majors, it is that time of year when you need to decide about applying to graduate school. There are a lot of questions that you must answer as you move forward with your planning. These include what type of career you hope to pursue and the schools you plan to apply to.

However, in my 31 years as a faculty member, I (Jonathan) find students are not asking themselves a critical question: How will he or she deal with financing graduate school?

The answer to this question about finances is not simple. Part of the complexity is that different career plans decrease or increase one’s financial burden. Those planning to attend a Ph.D. program in psychology are in luck as far as finances, because they are likely to be the recipient of a tuition waiver (i.e., free tuition) and a stipend (i.e., a fixed sum of money paid as a salary or allowance). We’ll talk about tuition in a minute, but keep in mind that a stipend is typically paid in exchange for a student being a Teaching Assistant (TA) or Research Assistant (RA). The yearly amount is about $20,000.

If your career plans involve earning a Master’s degree or a PsyD, your financial situation is typically very different than that of a graduate student in a Ph.D. program. This is because graduate students in a Master’s or PsyD program generally receive no financial assistance. That is, these students must not only pay their tuition, but they will not receive a stipend from their university to help defray the cost of living. Both paying one’s own tuition and everyday costs of living (e.g., rent, food, transportation) are likely to be major stumbling blocks for potential graduate students.

To start, tuition is generally pretty expensive. How expensive depends on what school you attend. Will you go to a public university or a private university?

In general, private universities are more expensive than public universities. In addition, tuition costs vary a great deal at public universities because it depends on whether you are a resident of the state where the university is located (in-state tuition) or you are not a resident of the state where the university is located (out-of-state tuition).

Private universities typically charge the same for in-state and out-of-state graduate students. As you might imagine, in-state tuition is almost always significantly less than out-of-state tuition. For example, at the University of Kentucky, in-state tuition for graduate school is $13,000, but out-of-state tuition is $32,000 — quite a difference!

Let me make two other points about the issue of residency. First, if you can earn an online graduate degree from a public university, it is possible that the tuition will be the same regardless of which state you are a resident. Second, changing your status from out-of-state to in-state (i.e., becoming a resident) is typically very difficult. It is important to check out the laws for residency, because not only do they vary between states, but they get very complicated. Is there a way to beat the system and gain residency so you can pay in-state tuition? It may be possible, but it may require some drastic steps like moving to a state for some period of time and getting a job and a place to live prior to applying to graduate school.

If you do not receive any stipends as a Master’s or PsyD degree student, a problem you will face is that you have to live a normal life. It is hard to estimate exactly how much you need to live, but various sites on the Internet settle on about $20,000. Keep in mind, however, that this amount may vary dramatically based on the location of your school. For example, living in Lexington, KY costs less than living in Los Angeles. You can compare costs of living in different cities online — check out this site.

After reading all of the above, if you are still set on going to graduate school in psychology then make sure you have a plan to deal with your finances. Here are six important issues to keep in mind:

1. Determine if you have money that you do not have to pay back. This money can be from savings, and/or from your family.
2. Apply for any and all scholarships, grants, fellowships, assistantships, etc. You never know if there is money available that others may not have considered but is available, if you just ask.
3. Submit your Federal Student Aid (FAFSA) form. If you need any type of federal assistance, the FAFSA must be on file.
4. Determine if you can work while attending school. Although having a job will help you out in the short term, if you have to work it will likely lead to your taking fewer credit hours each semester, and thus lengthen your time in school.
5. Be prepared for an emergency. No one likes to think about it, but things happen that require money. Always try to have some back-up funds to help yourself in a pinch.
6. Understand loan options. No one really wants to take out one or more loans, but sometimes it is a necessity. I’ll talk about loans below.

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There are three types of loans you will likely consider. First, there are Federal Direct Loans. Keep in mind the following about these loans:

• An acceptable credit history is NOT required.
• Each loan has an origination fee of 1.06%.
• The interest rate is 6.08% annually.
• The loans are unsubsidized—you are responsible for paying all interest.
• Interest accrues while you are still in school.
• The maximum amount you can borrow each year is $20,500.
• The maximum total loan amount is $138,500—this includes any Federal Direct Loans you received as an undergraduate.
• You must be enrolled at least half time to secure these loans.
• Repayment begins 6 months after you cease to be a half-time student.

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Second, you can secure Federal Direct Plus Loans. These loans are designed to help pay for education expenses not covered by other financial aid. The specifics of these loans include:

• Require an acceptable credit history or you need someone to co-sign the loan.
• Each loan has an origination fee of 4.24%.
• The interest rate is 7.08% annually.
• The loans are unsubsidized—you are responsible for paying all interest.
• Interest accrues while you are still in school.
• There is no maximum you can borrow each year.
• You must be enrolled at least half time to secure these loans.
• Repayment begins 6 months after you cease to be a half-time student.

Finally, you can get a Private Student Loan through a private bank, credit union, or public corporation (e.g., Sallie Mae). The interest rates on these loans will vary as a function of your credit history. The amount you can borrow, the origination fee, and the payment deferment requirements will vary by the lending institution. Of course, you need to check all of this out prior to applying for a loan.

In thinking about loans you need to keep in mind that it is typically best not to borrow the maximum amount available. You can always spend the additional money. I have heard some argue that being in graduate school requires living like a poor graduate student. So, ask yourself: Do you really need cable TV?

I hope this post helped you better understand financing graduate school in Psychology. It can be tough to pay for all of the costs associated with obtaining a graduate degree, but if you understand the costs, and plan accordingly you will be prepared to meet these financial challenges.

Good luck!

The comments of Dr. Golding and the others who post on this post express their own opinion and not that of the University of Kentucky.