THIS FALL, thousands of students will be heading back to school to pursue a professional or graduate degree. And, unlike during their undergraduate years, most of the aspiring doctors, lawyers and scholars will be on their own when figuring out how to pay the bills.
The cost of a master's program at a public college last year averaged $17,207, including living expenses, according to a National Association of Student Financial Aid Administrators survey. Most students will need financial aid to pay those bills, and more than 75 percent of that aid in 2003 came in the form of federal and private loans, the association says.
But how do you find the best deal?
"It's very difficult to compare these programs," says Richard Woodland, director of financial aid at Rutgers University in Camden, N.J. "You don't have enough information to find and analyze all of those special offers."
The difficulty increases particularly with private loans because, unlike federal aid, banks and institutions are not bound by government terms.
But there are some steps you can take to help minimize your costs.
Start with the university financial aid office and ask for lenders with a strong history of educating students on the loan-and-repayment process, as well as providing competitive terms.
Some questions to ask: Are interest-rate discounts available after graduation? Is the origination fee, normally deducted from the loan value, covered? Are there state loan programs for where I'm a resident or going to attend school that are a cheaper alternative?
Chela Education Financing (www.chelastudentloans.org), a nonprofit lender for California residents or students attending schools in the state, covers the 3 percent origination fee for Stafford loans, offered through the federal college-lending program.
And upon graduation, Chela will automatically reduce your interest rate by 1.5 percent -- there's no need to prove yourself worthy with 36 or 48 months of on-time payments.
For students outside California, Access Group Inc. (www.accessgroup.org) is a nonprofit organization that exclusively services graduate student loans. The origination fee is covered on Stafford loans and a 2 percent cut on interest rates is possible after you've made 48 payments on time.
Chela and Access Group offer private loans, though interest rates will vary according to your credit report (the interest rate on federal loans is standard for all borrowers and is currently 2.77 percent while in school and 3.37 percent during repayment). So if private loans are necessary, be sure to request a copy of your credit report at least six months in advance to correct any errors or to try to improve your score.
The Princeton Review published its first guidebook for graduate funding last year, Paying for Graduate School Without Going Broke ($20). The Web site www.princetonreview.com is also a good source, providing information not only on Chela and Access Group but on other loan programs, such as KeystoneBEST for Pennsylvania students.
Before you borrow, check out opportunities to become a graduate or teaching assistant, especially if you're in a research master's or Ph.D. program. These positions generally cover the cost of your tuition as well as provide a stipend.
Finally, think through whether salaries in your chosen profession will allow you to live and pay off your loans comfortably.
E-mail Carolyn Bigda at email@example.com.