Grad school debt can affect your financial life long after graduation. Borrow too much, and you negate much of your shiny post-degree pay raise. How to keep your expenses---and thus your debt---in check while you're in school.

Whether you recently graduated from college or are going back to school after working for a few years, graduate school is an opportunity to expand your knowledge, improve your skills, and increase your life-long earning potential.

While an advanced degree often means higher pay in many industries, many students make mistakes when deciding how to pay for graduate school—mistakes that can affect them for the rest of their lives.

Here are six things to consider when figuring out how to pay for graduate study. These decisions may mean the difference between grad school setting you back and grad school unlocking untold career and financial potential.

Check out our grad school ROI calculator to estimate your graduate program’s financial return on investment.

1. Consider part-time options carefully

When you get your heart set on a graduate degree, you’ll likely want to drop what you’re doing and fully immerse yourself in your studies. Certainly, some degrees will require full-time enrollment.

If, however, you want to pursue an MBA or other master’s degree that you can complete part-time, consider the possibility. Yes, it will take you longer to complete the degree. And yes, it may be difficult to balance work and school. The tradeoff, however, is that you can continue to earn a strong income while paying for school. That’s a huge savings, because you won’t have to borrow money for living expenses and you may be able to borrow less for tuition.

  • Takeaway: If possible, pursuing your graduate degree part-time could be the smartest financial move.

2. Save what you can, but keep a cushion

As we’ll mention below, your goal should be to minimize your student loan debt from graduate school. So whatever money you can save for tuition and living expenses is a good thing.

But here’s the catch: You should avoid using all of the money you saved for tuition only to find that you need to borrow more money later to get you through your years in school or—worse—covered an unexpected setback.

Ideally, you should go into graduate school with some kind of emergency fund. It may not cover the full six months of living expenses that we recommend most people keep on hand, but it should be enough to get you by in between loan disbursements or if an accident lands you in the ER.

  • Takeaway: Don’t go back to school broke; just because you’re a student doesn’t mean you don’t need an emergency fund.

3. Shop around for grad school loans

Although federal student loans for grad school typically provide the most flexibility, it’s still important to shop around. Some private student loan lenders offer loans for graduate and professional degrees that may come with lower interest rates than federal loans.

Private lenders do not typically offer the same repayment options as the federal government nor do they offer some of the more appealing programs like pay-as-you earn or income-based repayment plans. However, you won’t know if their rates are better until you ask.

Two options to check out are Ascent Loans and Credible. Ascent lets you check grad school rates easily and quickly in just four steps, with no credit check needed. If you do decide to take out a loan through them, you’ll pay no fees (other than your interest rate, of course). Plus, they offer flexible payments with 7, 10, 12, 15, or 20-year repayment terms. You’ll qualify for a fixed-rate loan with a rate of 3.15% - 14.75%, or a variable-rate loan with a rate of 0.97% - 11.79%.

Credible, on the other hand, is a student loan marketplace, meaning you can check your rate for multiple lenders all from Credible’s website. Using Credible also won’t affect your credit score and their application process takes just a few minutes.

  • Takeaway: Before automatically taking out federal loans for graduate school, shop for private student loan rates.

4. Don’t borrow the maximum just because you can

It’s difficult to live on small graduate school stipends, I know. When I was in graduate school, my yearly stipend was $14,000. I should have just lived on that, but instead, during two semesters, I borrowed more to pay for other things.

It might feel more secure to have a (borrowed) financial cushion, but my advice is to do anything you can to keep from borrowing more money than you need. Just because the money is available doesn’t mean you should take it.

Related: Should you take out loans to pay for living expenses in graduate school?

Graduate school is not a time in your life for nice vacations or other unnecessary life enhancements. It really is a time for reading, studying, and learning your craft.

  • Takeaway: While you’re a grad student, borrow only what you need to pay for tuition and living expenses.

5. Keep track of how much you borrow

Many students make the mistake of not keeping track of how much money they borrow. Each semester, they simply accept the loans that are offered to them without even thinking twice.

Calculate your student loan balance at the beginning of each semester, so you know how much you’ve taken out already. Then, take into account all of your expenses for the following semester like rent, food, and utilities. You should also add in a little padding for emergencies. Calculate how many months you will need this income for and how much you think you can contribute with part-time work or your graduate stipend.

Once you know this number, only take out how much you need, not how much you want or the amount that would make life easier.

  • Takeaway: Tracking how much you’ve borrowed to date will help you borrow less over the course of your graduate school tenure.

6. Don’t spend your student loan funds on unnecessary stuff

I’ve known grad students to use their student loan money for backpacking trips, engagement rings, and even weddings. Those extravagant purchases aside, most graduate students I knew lived an inflated lifestyle. I admit: I was guilty of it, too. If I only knew then what I knew now, my student loan burden would be far less.

Despite how difficult it is to live on a graduate school income, remember that this is temporary.

You will need a place to live, and you might have to use student loans to pay for living expenses in graduate school, but be mindful of the type of apartment you live in. It doesn’t have to be the greatest or the best. Mine was $500 a month, had no air conditioning, and I’m confident had a rat living in the vents.

  • Takeaway: While you’re a poor graduate student, live like a poor graduate student.

Summary

When deciding how to pay for graduate school, the key is to be aware of how much you’re borrowing and give yourself a set spending allowance so that you won’t have to take out more student loans than you need. That way, your graduate school experience can be one of growth and learning and not one that contributes to years and years of debt after you graduate.

If you’re exploring ways to pay for school, our partner Credible provides a free, simple way to compare private student loan lenders and apply online. See the private student loan rates available to you here.

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About the author

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Catherine Alford is an award winning personal finance writer who founded her own blog BudgetBlonde.com in 2010. When she is not writing, she spends her day taking care of her very active boy/girl twin toddlers.