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Alternative ways to pay for graduate school

Here are some benefits and considerations for alternatives you may be considering to help you pay for graduate school.

Borrowing or withdrawing money from your 401(k)


  • You can withdraw or possibly borrow money for graduate school (if your employer’s plan allows it) from your 401(k) account.


  • You may pay a penalty as well as income taxes on a withdrawal from your 401(k).
  • If you borrow against your account and leave your employer, you may have to repay the full amount immediately.
  • Most financial experts don’t recommend using money from your 401(k) to help pay for graduate school. You can borrow money for graduate school, but you can’t borrow for retirement.

Using a credit card to help pay for graduate school


  • You can get money for graduate school quickly and easily from your credit card.


  • The average credit card interest rate is around 16%, which is higher than other financing options for graduate school.
  • Your school may charge you a processing/convenience fee for paying for graduate school with a credit card.

Using a personal loan to help pay for graduate school


  • If you have excellent credit and apply for a personal loan, you can often get money for graduate school in a few days.


  • The average personal loan interest rate is higher than most federal and private graduate student loans.
  • Personal loans typically come with a shorter repayment term, which can mean higher monthly payments.
  • Since they aren’t designed to pay for graduate school, personal loans generally won’t have features like grace periods, repayment options, or deferment.
  • Some personal loans don’t let you use them for educational purposes.

Borrowing against the equity of your home to help pay for graduate school


  • You can use the equity of your home as collateral for a loan to help pay for graduate school; the average HELOC (Home Equity Line of Credit) interest rate runs around 4.4% – 5.0%.


  • If you default on your home equity loan, you risk losing your home.

Sources of extra money for graduate school

These may not pay your graduate school tuition, but they can help you with living expenses or even a book or two.

  • “Found” money
    Your income tax refund, a pay raise, or those childhood savings bonds can mean additional cash for graduate school.
  • Employer reimbursement
    According to U.S. News & World Report, more than half of all employers offer some form of education benefit, particularly when the coursework is job-related. Even if there isn’t an official program in place at your job, it doesn’t hurt to ask.
  • Work-study
    Resident assistant (RA): You can get free room and board or tuition in exchange for living in the dorm and overseeing a group of students, typically undergraduates.
    Teaching or research assistantships: These positions generally cover at least part of the tuition bill (sometimes plus a modest stipend) in exchange for teaching or researching. The experience you gain is a great resume builder.

To apply for work-study through the Federal Work-Study Program, fill out the FAFSA.

 This information was gathered on 7/11/17 from credit card APR and Average national rate report.

 This information was gathered on 12/18/16 from,

 This information was gathered on 7/17/2017 from

Sallie Mae does not provide, and these materials are not meant to convey, financial, tax, or legal advice. Consult your own attorney or tax advisor about your specific circumstances.