How to Pay for Graduate School When Federal Student Loans Aren’t Enough

Attending graduate school can be a stepping stone to a higher salary, greater responsibility, and, for some careers, a basic requirement for even an entry-level role.

However, once you’ve been accepted, you need to answer another important question: how will you pay for it? Changes to the federal student loan program have significantly reduced how much graduate students can borrow from the government, which means many students will need to combine several funding sources to cover their costs.

Keep reading to learn how to pay for graduate school — even if you’ve maxed out your federal loans.

Why won’t federal loans cover most graduate programs?

Before the One Big Beautiful Bill Act (OBBA) was passed in 2025, graduate students had two main federal borrowing options. They could take out Direct Unsubsidized Loans, which had an annual cap of $20,500. If that wasn’t enough, they could use Graduate PLUS loans to cover the remaining balance up to the full cost of attendance.

The OBBA eliminated Grad PLUS loans for new borrowers starting July 1, 2026, and replaced the old system with two tiers of borrowing limits. Graduate students can borrow up to $20,500 per year with a $100,000 aggregate limit. Professional students in fields such as medicine, law, and dentistry can borrow up to $50,000 per year, with a $200,000 aggregate limit. These aggregate limits include any federal loans taken out for undergraduate degrees.

To understand why this creates a funding gap, compare those limits to the actual costs of graduate programs.

These figures reflect tuition and fees only. When you factor in living expenses, books, and health insurance, the total cost of attendance can be significantly higher. For example, the full cost of attendance at a private medical school often exceeds $80,000–$90,000 per year.

What scholarships, fellowships, and assistantships are available for graduate students?

Before borrowing, explore “free money” options that can reduce how much you need to borrow. Scholarships, fellowships, and assistantships could cover part of your costs, though it’s important to set realistic expectations about how much they’ll contribute to your overall funding mix.

Fellowships and assistantships

Fellowships and assistantships are common in STEM and research-oriented programs. Some cover full tuition and provide a living stipend, while others may provide only a few thousand dollars per year. Each fellowship has its own criteria and rules, so the amount of support can vary widely.

Teaching assistantships (TAs) and research assistantships (RAs) typically require 10–20 hours of work per week in exchange for tuition remission or a stipend. These positions can be competitive, so apply early and reach out directly to program directors or department coordinators about availability.

Scholarships and grants

Scholarships and grants are available from your university, professional organizations, and third-party sites such as Fastweb and Scholarships.com. The best scholarships to pursue are those that align with your background, field of study, and demographic. For example, if you’re a woman pursuing an engineering degree, look for scholarships geared toward women in STEM.

You can apply for scholarships at any point during your program, not just at admission. Your school may have its own scholarship program with a separate application and different deadlines from your original admission application.

While there are limits on how much you can borrow in student loans, there’s no limit on how many scholarships you can apply for. However, graduate-level scholarships tend to offer smaller amounts than undergraduate awards, so they’re more likely to reduce your borrowing than eliminate it entirely.

How can employer tuition assistance help pay for graduate school?

If you’re currently working, your employer may offer tuition assistance as an employee benefit. Every employer has its own rules on how much they’ll pay and any restrictions that apply. For example, some employers require you to pay for classes upfront and then reimburse you after you meet certain academic requirements, such as maintaining a B average or higher.

Many employers also limit tuition assistance to fields related to your current role. If you work for a biomedical company, they may cover your master’s in molecular biology, but not a degree in creative writing. Under current IRS rules, employers can provide up to $5,250 per year in tax-free educational assistance.

Some companies extend tuition benefits to part-time employees as well. For example, Starbucks offers tuition assistance for part-time workers, though the benefit is typically limited to specific online programs. If you’re considering this route, make sure you can handle working and attending classes at the same time.

Loan repayment programs are another potential option for graduate students. If you’re in the medical or legal field, you may be eligible for a special loan repayment program (LRPs), which can provide up to $100,000 in loan repayment.

How do private student loans work for graduate school?

With Grad PLUS loans no longer available and federal borrowing capped well below the cost of most programs, private student loans have become a standard part of the funding equation for most graduate and professional students. Rather than treating private loans as a last resort, it’s more realistic to view them as a practical tool that most grad students will need and to borrow strategically.

Banks, credit unions, and online lenders offer private student loans. Unlike federal loans, they typically require a credit check and evaluate your creditworthiness (or a cosigner’s) when determining your interest rate and loan terms. Some lenders offer loans designed specifically for graduate students in certain fields, such as medical or law school, that may come with higher borrowing limits or specialized repayment features.

When comparing private student loans, pay attention to several key factors. Look at whether the interest rate is fixed or variable and compare rates across multiple lenders.

Review repayment terms, including whether the lender offers in-school deferment or interest-only payments while you’re enrolled. Check for origination fees, autopay discounts, and cosigner release policies. A cosigner with strong credit can help you secure a lower interest rate. Still, many lenders also offer loans to graduate students without a cosigner if your credit and income (or expected income) qualify.

Keep in mind that private loan terms and availability can vary by program. Students in high-earning fields like medicine and law may find more options and more competitive rates than students in other fields. Shop around and compare at least three to five lenders before committing.

How should you think about borrowing for graduate school?

Not all graduate debt is created equal. A $200,000 debt load for a medical degree that leads to a $250,000+ starting salary is a fundamentally different financial decision than $200,000 for a program where the median graduate earns $55,000. The key is to evaluate your expected borrowing against realistic salary outcomes for your specific field and program.

A common rule of thumb is that your total student loan debt at graduation should not exceed your expected first-year salary. This isn’t a hard limit, but it’s a useful benchmark. If you expect to earn $80,000 after graduation, try to keep total borrowing at or below $80,000. Students in professional programs like medicine, dentistry, and law often need to exceed this ratio, but the higher earning potential in those fields typically makes the math work over time.

Before you commit to a program, research the median starting salary for graduates of that specific school and program, not just the field in general. Factor in your anticipated monthly loan payments and whether your post-graduation salary can comfortably cover those payments along with other living expenses. A loan repayment calculator can help you estimate monthly payments at different loan amounts and interest rates.

Also consider ways to reduce your total borrowing. Attending a public university as an in-state resident can significantly lower tuition costs. Completing a program in fewer semesters, choosing a school in a lower cost-of-living area, or working part-time while enrolled are all strategies that can reduce how much you need to borrow.

The Bottom Line

The elimination of Grad PLUS loans has changed how graduate students need to approach paying for school. For most students, the funding plan will involve a combination of federal loans, scholarships or assistantships, and private student loans. The goal isn’t to avoid borrowing entirely — it’s to borrow strategically, minimize your total cost, and make sure your expected career outcomes justify the investment. Start by maximizing free money and federal aid, then compare private loan options carefully to fill the gap.

Frequently Asked Questions