Financial Advice: Paying for Your MPA & MPP Degree
Payment options abound, but read the fine print first.
If you’ve decided that the benefits of pursuing an MPA or MPP degree outweigh the costs, the next logical step is figuring out how you’re going to pay for your continuing education. Below, we describe the most popular types of financial aid for graduate students.
Loans: Public vs Private
You have two options when it comes to loans -- federal and private. Private loans offer a higher cap on the amount you can borrow, and often allow you to use a portion of the funds to pay for housing, books and other necessities, but these loans generally have higher interest rates and fees. In contrast, loans offered through the federal government might be smaller, but have lower, fixed interest rates and more generous repayment options (in fact, as a public servant, you may be eligible for loan forgiveness after 10 years of on-time payments).
Three federal loan options are available to graduate students. To qualify for a federal loan, you need to fill out the Free Application for Federal Student Aid (FAFSA).
1. Stafford: If you will be attending school at least half-time and have not defaulted on a student loan in the past, you may be eligible for an unsubsidized Stafford loan (as of July 2012, graduate students are no longer eligible to receive unsubsidized Stafford loans). This loan allows you to borrow up to $20,500 per year with a lifetime cap of $138,500 (which includes any undergraduate Stafford loans). Interest accumulates on this loan while you are in school, and is fixed at 6.8 percent with a 1 percent upfront fee on the amount borrowed. Financial need is not a factor in determining who receives a Stafford loan.
2. Direct PLUS Loans: Graduate and professional students with a good credit history may be eligible to receive direct PLUS loans. This loan allows you to borrow up to the maximum cost of your attendance, less any other financial aid you receive. The interest rate is fixed at 7.9 percent and there is a 4 percent fee each time a loan disbursement is made.
3. Perkins: Students with exceptional financial need are eligible to apply for a low-interest Perkins loan. The federal government pays for the loan but the school you attend is your lender and the body to which you make payments. You are eligible to borrow up to $8,000 per year with a lifetime cap of $60,000 (which includes any undergraduate Perkins loans). The amount you receive each year is based solely on financial need.
Because of the higher, often variable, interest rates on private loans, they should be a last resort when financing your graduate education. If it becomes necessary to obtain a private loan, be sure to shop around to find the best interest rate -- don’t automatically choose your school’s “preferred lenders”. Be aware that some lenders charge fees on top of the interest rate; and it is not uncommon for a lender to charge one interest rate while you are in school and another after you graduate. The interest rate and fees on a private loan depend on your credit score (and your co-signers credit score, if any). A cosigner can typically help you get a lower interest rate because it removes some of the lender’s risk. Be sure you understand the terms of the loan -- when it needs to be repaid, how long you have to repay and what repayment options are available.
Scholarships and Fellowships
An abundance of scholarships, which unlike loans do not need to be repaid, are available for those interested in pursuing advanced degrees -- you just have to be willing to look for them. The best place to start is with your own institution: contact the financial aid office and find out if they have a listing of available scholarships and selection criteria. Also consider asking your employer -- are there any scholarships for students pursuing MPA or MPP degrees? -- and community organizations or clubs of which you are a member. Be cognizant of scholarship scams -- if you’re being asked to pay to apply, it is likely a scam.
A number of prestigious nationwide fellowships are available to help cover the cost of your graduate education (think Fulbright), but your school may offer fellowships as well. Contact your financial aid office to learn more.
Work-Study is a federal program available for students with a demonstrated financial need. Students in the Work-Study program have the opportunity to work on- or off-campus in specific positions to earn money for education expenses.
Words of Advice
1. Check with your school’s financial aid office for information on financing your education.
2. Be aggressive in your search for financial aid, make it a priority, and apply early and often.
3. Keep track of deadlines, what you’ve applied for and when you anticipate a response
4. Keep essays and letters of recommendation on-hand to make applying for grants and scholarships more efficient.
5. Negotiate your financial aid package -- let the schools you’ve received financial aid packages from know about any other offers you have, and make sure they understand your full financial need.
Scholarship search sites
State-by-state grants and scholarships
Financial aid for specific graduate students (veterans, disabled students, etc.)
Graduate school and financial aid information from the U.S. Department of Education
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