Paying for a master’s degree usually means stacking several funding sources rather than relying on one. The cheapest money comes first: assistantships and fellowships that waive tuition, employer tuition benefits, and veterans’ education programs if you qualify. Federal student loans fill most of what’s left, with private loans as a last resort. Along the way, tax credits and a loan-interest deduction quietly lower your net cost. A master’s program can run anywhere from about $30,000 to well over $120,000 in tuition, and your school’s official cost of attendance, which folds in housing, food, books, transportation, and personal expenses, is the ceiling on how much aid you can receive.1Office of the Law Revision Counsel. 20 USC 1087ll – Cost of Attendance
Start With Assistantships and Fellowships
An assistantship is the best deal in graduate funding. You work 15 to 20 hours a week for your department, teaching, supervising labs, or doing research, and the university typically waives all or most of your tuition and pays a stipend on top. Stipends generally fall between $15,000 and $35,000 per academic year, with STEM and engineering programs at the higher end.
Fellowships pay you without requiring work. Universities award them based on academic record, research promise, or endowment priorities, and offers usually arrive with your admission letter. Some cover full tuition; others reduce your bill by a set amount each semester or fund conference travel and equipment.
Ask your prospective program directly what percentage of admitted students receive assistantship or fellowship funding, and whether that funding is guaranteed for multiple years or has to be reapplied for each term.
External Fellowships
Several national fellowships pay graduate students directly, independent of your school. The NSF Graduate Research Fellowship pays a $37,000 annual stipend plus a $16,000 cost-of-education allowance to your institution, and provides three years of support spread across a five-year period.2NSF – U.S. National Science Foundation. NSF Graduate Research Fellowship Program (GRFP) Solicitation Fulbright grants fund international study or research and generally cover a living stipend, round-trip travel, and health insurance for the academic year, with some programs also covering tuition. Deadlines for major external awards typically fall a full year before funding begins, so start these applications early.
Employer Tuition Assistance
If you’re working, check whether your employer has an educational assistance program before you borrow a dollar. Federal tax law lets an employer pay up to $5,250 per year toward your graduate education tax-free, meaning it doesn’t appear as taxable wages on your W-2.3Office of the Law Revision Counsel. 26 USC 127 – Educational Assistance Programs Anything above that gets added to your gross wages and taxed normally. Legislation signed in July 2025 made this benefit permanent and adds an inflation adjustment starting in tax years beginning after 2026.
Employers either pay your school directly or reimburse you after each course, and most require a minimum grade, often a B, to release the money. Read the agreement carefully before signing: nearly every program includes a clawback clause requiring you to stay one to two years after finishing your degree, or repay some or all of the assistance. If you’re planning to change jobs after graduation, the repayment bill can be substantial.
Veterans and Military Benefits
Veterans and active-duty service members have access to some of the most generous graduate funding available. At the 100 percent Post-9/11 GI Bill benefit level, the VA covers the full cost of tuition and mandatory fees at public universities. For private institutions, the cap is $30,908.34 per academic year for the period from August 1, 2026, through July 31, 2027. You also receive a Monthly Housing Allowance pegged to the E-5-with-dependents Basic Allowance for Housing rate at your campus, which can exceed $2,000 per month in higher-cost areas. Online-only enrollment pays up to $1,261 per month.4Veterans Affairs. Future Rates for Post-9/11 GI Bill
If a private graduate program costs more than the GI Bill maximum, the Yellow Ribbon Program can close the gap. Participating schools voluntarily contribute a set amount toward remaining tuition, and the VA matches it dollar for dollar. Yellow Ribbon requires the full 100 percent Post-9/11 GI Bill eligibility, which generally means at least 36 months of qualifying active-duty service. Not every school participates, and those that do may cap the number of students or the amount per student, so confirm with the admissions office.5Veterans Affairs. Yellow Ribbon Program
Federal Student Loans
For the balance after grants, assistantships, and employer help, federal loans are the next stop. They carry fixed interest rates set each July 1 and come with borrower protections private loans do not match.
Direct Unsubsidized Loans
Every graduate student enrolled at least half-time can borrow up to $20,500 per academic year in Direct Unsubsidized Loans, regardless of financial need. The rate for loans first disbursed between July 1, 2025, and June 30, 2026, is 7.94 percent.6Federal Student Aid Partners. Interest Rates for Direct Loans First Disbursed Between July 1 2025 and June 30 2026 Interest accrues from the day of disbursement, not when you leave school. An origination fee of about 1.057 percent comes off each disbursement, so you receive slightly less than you owe.
The lifetime aggregate limit for graduate borrowers is $138,500 in combined subsidized and unsubsidized Direct Loans, and that ceiling includes any undergraduate borrowing.7Federal Student Aid Partners. Annual and Aggregate Loan Limits Borrow $30,000 for your bachelor’s and you have $108,500 of federal capacity left for graduate school.
Graduate PLUS Loans
When the annual unsubsidized limit isn’t enough, Graduate PLUS Loans let you borrow up to the full cost of attendance minus other aid received.8Office of the Law Revision Counsel. 20 USC 1078-2 – Federal PLUS Loans The rate for the 2025–2026 disbursement period is 8.94 percent with an origination fee of roughly 4.228 percent.6Federal Student Aid Partners. Interest Rates for Direct Loans First Disbursed Between July 1 2025 and June 30 2026
Unlike unsubsidized loans, PLUS Loans require a credit check. The Department of Education will deny your application if you have an adverse credit history, generally meaning accounts 90 or more days delinquent, a recent default, bankruptcy discharge, foreclosure, or wage garnishment. Denied applicants can appeal with documented extenuating circumstances or reapply with an endorser who has clean credit. Graduate PLUS Loans do not count against the $138,500 aggregate limit, so they can add substantially to your total federal debt.
Repayment and Forgiveness Change the True Cost
Before you decide how much federal debt to take on, factor in what repayment will look like. If you work full-time for a government agency or a 501(c)(3) nonprofit after graduation, Public Service Loan Forgiveness can erase your remaining Direct Loan balance after 120 qualifying monthly payments under an income-driven plan.9Federal Student Aid. Public Service Loan Forgiveness Program That’s ten years. For a graduate borrower with $80,000-plus in loans and a modest nonprofit salary, the forgiven amount can easily top $50,000. Submit an employer certification form each year so there are no surprises at payment 120.
Income-driven repayment itself is in the middle of a major overhaul. Loans disbursed before July 1, 2026, can currently use Income-Based Repayment, Pay As You Earn, or Income-Contingent Repayment, each of which caps payments as a share of discretionary income and forgives the remaining balance after 20 or 25 years. For loans disbursed after July 1, 2026, the new Repayment Assistance Plan will be the only income-driven option, setting payments at 1 to 10 percent of adjusted gross income and forgiving remaining balances after 30 years. The SAVE plan, which had offered the most favorable terms for graduate borrowers, was terminated by a federal appeals court in early 2026 and is no longer accepting new enrollments.
Private Loans as a Last Resort
Private lenders, including banks, credit unions, and online lenders, fill gaps that federal loans and aid cannot cover. Rates depend on your credit score and the lender’s assessment and generally run from about 4 percent to 15 percent, fixed or variable. A borrower with excellent credit might beat the federal rate; most will not.
Many graduate students bring in a co-signer with strong credit to qualify or get a better rate. Ask upfront about co-signer release. Some lenders let the co-signer come off the loan after a set number of consecutive on-time payments, but terms vary and must be spelled out in the agreement.10Consumer Financial Protection Bureau. If I Co-Signed for a Private Student Loan Can I Be Released From the Loan Not every lender offers release, so confirm before signing.
The real trade-off with private loans is what you give up: no income-driven repayment, no Public Service Loan Forgiveness, and no federal deferment or forbearance protections beyond what the contract says. Exhaust federal borrowing first, even when a private rate looks comparable, because the flexibility of federal loans has monetary value when circumstances change.
Tax Credits and the Interest Deduction
Two federal tax benefits reduce what your degree actually costs.
The Lifetime Learning Credit is worth up to $2,000 per tax return, calculated as 20 percent of the first $10,000 in qualified tuition and fees, and it covers graduate coursework.11Internal Revenue Service. Lifetime Learning Credit The credit phases out between $80,000 and $90,000 of modified adjusted gross income for single filers, and between $160,000 and $180,000 on a joint return; above those thresholds you cannot claim it.12Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 You also cannot claim it on expenses your employer already paid tax-free under the $5,250 exclusion, so it applies only to what you paid out of pocket beyond that.
Once you’re in repayment, you can deduct up to $2,500 of student loan interest per year from taxable income. It’s an above-the-line deduction, so you get it whether or not you itemize. It phases out for single filers with modified adjusted gross income between $85,000 and $100,000, and for joint filers between $170,000 and $200,000.13Internal Revenue Service. Tax Credits and Deductions for Education At typical graduate borrowing levels, maxing this out saves roughly $550 to $625 a year in federal taxes depending on your bracket.
How to Apply
Everything federal starts with the Free Application for Federal Student Aid. Create an account at studentaid.gov, which serves as your legal electronic signature, then complete the FAFSA. You’ll need your Social Security number, federal tax returns, W-2s, records of any untaxed income, and current balances for savings and investment accounts.14Federal Student Aid. FAFSA Checklist – What Students Need Graduate students are automatically independent for FAFSA purposes, so no parental financial information is required regardless of age. File as soon as possible after October 1 for the following academic year, because some institutional aid is first-come, first-served.
Some graduate programs, particularly at private universities, also require the CSS Profile. Roughly 350 institutions use it to award their own grants and fellowships, and there’s a submission fee. Check each school’s financial aid page and don’t miss this if it applies, because skipping it can cost you institutional grant money.
For private loans, expect to provide recent pay stubs, proof of employment, and a government-issued ID; a co-signer submits the same. Most lenders let you check preliminary rates with a soft credit pull, so compare offers before committing.
Before any federal loan money reaches your school, you must sign a Master Promissory Note, the binding agreement to repay.15Federal Student Aid Partners. Direct Loan 101 – Master Promissory Notes – MPN Basics A single MPN covers all the Direct Loans you receive at that school for up to 10 years, so you typically sign it once at the start of your program.