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Mom, dad shouldn't pay for grad school
By NEALE GODFREY
from www.DelawareOnline.com
You got them through undergraduate school, now how are you and your children going to pay for graduate school?
Sure, a postgraduate degree may get young adults closer to fulfilling their career dreams and possibly earning more money in the process, but those postgraduate bills come first.
If parents have financed all of their children's education expenses up to this point, I think it's time these now not-so-young children contribute the lion's share.
(I believe undergraduates should be paying in one form or another for 25 percent of their education.)
Financial aid is one option, and if your family relied on it for undergraduate studies, you know the drill - forms, forms and more forms. But instead of mom or dad getting writer's cramp, the student should take charge now. In fact, you may want to just hand this article to your post-grad. I'm now writing to them:
The first step is to complete the Free Application for Federal Student Aid (FAFSA). This should be filled out regardless of socio-economic level. It will determine your eligibility for Federal Stafford Loans. It also is used when applying for most grants, scholarships, work-study programs and other non-federal aid.
Filling out the FAFSA isn't fun. It can be tedious and time-consuming. As the student, you will be asked for all sorts of personal financial information, so don't rush through this and don't wait until the deadline.
You will be treated as an adult during the evaluation. The application seeks your financial performance and income; you aren't required to disclose your parent's income or assets. You won't be jeopardized or lose the chance to get federal money because of your parents' financial situation.
The Stafford Loans are the most common form of federal aid; in fact, most graduate students are eligible to receive them. The Stafford Loan program can provide as much as $18,500 a year to a graduate student, and up to $138,500 in total, with an interest rate capped at 8.25 percent.
There are two kinds of Stafford Loans. The subsidized loans require a demonstration of financial need. Again, you are the borrower, not your parents. If you are in school at least halftime, or if your loans are in a grace period or in deferment, the government pays the interest on them.
You also can take unsubsidized loans regardless of your financial situation, but you'll be responsible for all of the interest that accumulates.
Based on your income, you also may be eligible to take a lifetime learning credit when you file your federal income tax return.
Next stop? Sit down with the financial aid people at the college where you've been accepted. A state university may offer you an in-state tuition rate even if you don't live there, and many private schools offer scholarships if they really want you. You must be proactive. If you're a great student, you can even play one school against the other. Show them the deal one school offered and see if they'll match it or better it.
You also may be able to work part time and go to graduate school, earning while you learn. Think about an assistantship. This is an opportunity to do research or teach, which beefs up your resume because you are working in your field.
It is usually a competitive situation to obtain assistantships because they can often cover a significant part of not only your tuition, but also your living expenses. A typical stipend for a full-time student is around $8,700 a year.
This is money you're earning, not borrowing, so there is no pay back or interest. But, of course, Uncle Sam will be watching and you do owe federal income tax on fellowship and assistantship income.
Also, most assistantships are real work, not busy work. Many assistants could work at least 20 hours plus a week, and those working as teaching assistants might work 20 hours, then need extra time to grade papers and meet with students. You have to see if this kind of commitment fits in with your own school work.
Many schools also offer their resident assistant jobs to graduate students. These are the people who typically live on a dorm floor and keep a watchful eye on the undergrads. You may receive a small salary, but the big perk is free housing. Again, it may seem easy, but plan to be awakened during the wee hours of the night when your students decide to party. You'll be responsible for their well-being and will not only be a shoulder to cry on, but also a disciplinarian. Give thoughtful consideration whether this is a role you want to play.
Aside from the government and universities, some employers might offer to contribute to post-grad education expenses. If they do, the employers more often than not will make you agree, contractually, to go back to work for them.
This may be a great deal if this is a company you know you want to work for, but make sure you understand the conditions before you accept this type of offer. It doesn't make sense to get locked into a job or company that will not offer you the opportunities you'll want after grad school. If you leave and thereby breach the contract, there will most likely be penalties and fees to pay and also you'll probably have to reimburse the educational expenses.
You also could look for school-work compromises. Perhaps you could negotiate a situation with your employer to go to school part-time and still work. That flexible situation keeps your toe in corporate work while going to school.
Remember, students often have summers off and long holiday breaks and you may be able to take some grad courses at night or on weekends. Also, in the world of job sharing and telecommuting, you may be able to negotiate for flextime with your employer. Don't just check the offered corporate policy. Speak with your boss. That future degree may be very valuable to them.
Neale S. Godfrey, a former bank president, is an expert on family finance. Her 14 books include "Money Doesn't Grow on Trees."
Send questions to neale@childrensfinancialnetwork.com.
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