Budgeting and Planning for a Master’s Degree

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Pursuing a master’s degree is exciting, but it can also be expensive, even after scholarships and financial aid are factored in. If you’ve been burning to hit the books, these tips will make it easier to pay for grad school.

Pursuing a master’s degree is exciting, but it can also be expensive, even after scholarships and financial aid are factored in. If you’ve been burning to hit the books, these tips will make it easier to pay for grad school.

Give yourself time

It’s tough to accumulate the average $30,000 to $40,000 needed for grad school tuition. Allow a year or two to save, budget and plan rather than jumping right in.

Save smart

Establish a grad school fund and commit to depositing a set amount at regular intervals. Some sound education investment choices include:

  • 529 savings plans: Money grows tax-free but must be used for qualified educational expenses.
  • 529 prepaid tuition plans: These tax-free plans allow you to pay tuition in advance to avoid future rate hikes. Money must be used for tuition at the chosen school.
  • Certificates of deposit: These federally insured certificates offer higher returns than traditional savings accounts in return for leaving funds on deposit for a specified term. The money can be used for anything.
  • Savings and money market accounts: This choice offers the most liquidity, but rates tend to be lower than other options. There are no restrictions on how the money can be used.

Take advantage of tax breaks

Once you’re enrolled, Uncle Sam can help in two ways:

  • Lifetime learning credit: This tax credit refunds 20% of qualified educational expenses up to $10,000 for a maximum student benefit of $2,000 annually.
  • Tuition and fees deduction: Deduct up to $4,000 of qualified educational expenses annually.

Boost your cash flow

To create a cash surplus while saving for and attending grad school:

  • Enjoy more home-cooked meals and dine out less frequently.
  • Reduce entertainment expenses by exploring local parks, free concerts and neighborhood sporting events.
  • Sell unwanted items online or at yard sales.
  • Turn hobbies and interests into side income.
  • Shop around for the best deals on insurance, mobile phone, bank accounts and utilities.

If things are still tight, remember that you aren’t limited to choosing between full-time studies or none at all. Attending school part time over a longer period could make budgeting and work-study balance easier.

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