Best Ways to Pay for Grad School

Probably the worst Christmas present I ever got was a bill for $31,000 in student loans from Uncle Sam in December 2015. A few weeks earlier, I'd received my master's in mass communications.

I'll be honest: My decision to pursue an advanced degree was made more out of fear than foresight. I was placing my bets on a career in an industry not known for six-figure salaries or job security (see 10 Best College Majors for a Lucrative Career). During my final semester as an undergraduate, I worried that a bachelor's in journalism wasn't going to cut it in the real world, so I made what seemed like a safe bet: incur debt now for a better future later.

Certain professions, such as medicine and law, require advanced training. Many others–including mine–don't. In these fields, consider whether a graduate degree is worth the cost, especially if you have to put your career on hold while you're in school.

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The average annual tuition for a graduate degree at a public college or university is $30,000; for a private school, it's $40,000, according to Peterson's, a college information company. (If you get a doctorate, it will take several years, and you'll spend much more.)

Lighten the load. Many universities offer grants, scholarships and assistantships, including teaching assistant and graduate assistant positions, to help students pursuing advanced degrees offset the cost of tuition. The average T.A. made $26,260 last year, while the average G.A. made $37,720, according to the Bureau of Labor Statistics. Doctoral candidates are typically more likely than master's candidates to receive departmental assistantships. If you're employed, see whether your company sponsors a tuition assistance program. The IRS allows employers to provide up to $5,250 in tax-free education benefits a year; any benefit above that is considered taxable income. Some employers will cover the entire cost if you agree to work at the business for a set period after graduation.

If you're willing to join the military, you may be able to get a full ride for a degree in dentistry, medicine, nursing, optometry or veterinary care. Those admitted to the Armed Forces Health Professions Scholarship Program receive funding for tuition, books and fees, along with a $2,200 monthly stipend and a $20,000 sign-on bonus. After graduating, you'll owe one year of military service for each year you received support, with a minimum of three years.

Or you can borrow, which is what I did. Direct unsubsidized loans for graduate students carry a 6% fixed interest rate for the 2017-18 academic year, and you can borrow up to $20,500 a year. If that doesn't cover your costs, Grad Plus loans allow you to borrow up to the full cost of graduate school, including living expenses. The interest rate for Grad Plus loans taken out before July 1 (when rates will be adjusted) is 7%. You likely won't qualify if you've had a bankruptcy, foreclosure or similar black mark on your credit record within the past five years.

Unless you have excellent credit and are certain you'll have no trouble making payments, consider private loans as a last resort. Unlike federal loans, they typically don't come with repayment options, such as deferment or forbearance. Rates, which can be fixed or variable, are based on your credit record and whether you have a cosigner. Co-signers are on the hook for repaying the debt if you default.

My bosses at Kiplinger tell me that my master's degree gave me an edge when I was hired as a reporter. I'm now debt-free, thanks to a bare-bones lifestyle that enabled me to put one-third of every paycheck toward repaying my loans. But a couple of years of frugality was a small price to pay.