Grad School Financial Aid 101

Many students rely on some form of financial aid to afford their graduate studies. But navigating the different kinds of aid available as well as the best practices for applying for it can be tricky. As you plan for graduate school, we want to help build your financial aid literacy and share a few considerations and resources to keep in mind. 

Types of financial aid

Financial aid comes in two basic types: need-based and non-need-based. 

Non-need-based aid

Is sometimes referred to as as “merit-based aid” and is awarded based on the merit of a student’s academic performance, community activities, or athletic talent.

It is commonly granted in the form of non subsidized loans from the government referred to as the Direct Loan program which includes unsubsidized Stafford and Grad PLUS loans in which interest begins accruing while the student is in school. 

Need-based aid 

Is, as the title suggests, based on your financial need. 

It is commonly granted in the form of work-study, grants, and loans.

Each school’s financial aid office puts together your financial aid package. Packages could include a mix of federal, state, institutional, and private aid. 

Types of student loans

It’s important to know where your loans come from. Student loans are either from the federal government or from private entities, like financial institutions or banks. These loans types can differ in terms of benefits and repayment plans so it’s important to review all of the details. Be sure to keep copies of all of your loan documents, especially your Master Promissory Note (MPN). The MPN is the legal document you must sign in order to receive a federal student loan. By signing, you are agreeing to repay the loan according to the terms and conditions. You are responsible for repaying these loads even if you don’t complete your education. 


Your level of “need” is determined by the Expected Family Contribution (EFC) from your FAFSA (Free Application for Federal Student Aid). The higher your EFC (how much you are expected to contribute towards the cost of education) the less your calculated “need” will be, and vice versa.

The FAFSA calculates your EFC based on a combination of questions on the FAFSA about your:

  • Income - how much you earned in the prior year
  • Investments - what you own including but not limited to; real estate (not including the home you live in), trust funds, how many people live in your household and if you have any dependents. 

While the FAFSA takes into consideration many factors to determine your EFC, the relationship between all the questions on the FAFSA can be generalized in the following way:

  • Lower income, lower EFC, higher need
  • Lower assets, lower EFC, higher need
  • Greater household size, lower EFC, higher need
  • If you are an independent, lower EFC, higher need

Financial aid for graduate school

If you attended college in the United States, you may be familiar with the FAFSA but graduate financial aid is packaged very differently from undergraduate financial aid. Regardless of your income or assets, you may qualify for non-need based financial aid. A key difference is that the interest may not be deferred. That said, you can still get a guaranteed loan with a competitive interest rate. 

It is imperative for grad school applicants to apply for financial aid, even if you don’t think you will qualify. All grad school applicants are considered independent, so you are already considered higher need. If you are a working professional with income, do not assume that you won’t qualify for financial aid. Most graduate students qualify for federal student loans through the Direct Loans program, though there is a limit to how much you can borrow in a year. 

The financial aid package and process may vary by school

Everything from staff roles, steps for applying, and the opportunity to adjust your financial aid package may differ from school to school. To make sure you’re clear about the process at the schools you are applying to, ask the admissions staff about who you will work with about financial aid. Know your contacts and make connections early. 

Schools also put together their financial aid packages differently. Some may cover only what the EFC has determined as your need, while others will consider aid based on the full cost of attending. Additionally some financial aid offices may only be in charge of granting need-based aid, whereas the admissions office awards merit-based aid available only to students in your program. Merit-based aid is awarded on institutionally set criteria since it is private funding from the university. It is important to understand the variations in financial aid practice among schools so that you can reduce any frustrations and assumptions about the process.

Reviewing your financial aid package

Once you receive your financial aid package, it’s important to look through it carefully and determine if there is anything you want to appeal. You can appeal your package for a variety of reasons including but not limited to, you want less of a certain loan, (e.g., you want to decrease the amount of unsubsidized loans in your award), you want less of a stipend that has a labor stipulation (e.g., you must tutor a certain number of hours per week in order to receive the stipend) or you really want to go to this program but got a better offer at another school. 

To appeal, the best approach is to get in touch with the financial aid office as soon as possible. When you speak with financial aid, be sure to thank them for the award, present your situation, and ask them what, if any, options there are to improve your award. If there is not much wiggle room for changing your financial aid package, you may be put on a waitlist for federal work-study if it was not already awarded to you. Keep in mind that it might take time for the financial aid office to reconsider your offer. Stay proactive but make sure to also provide adequate time for them to address any changes. 

Scholarships, Fellowships and Other Funding

Financial aid applicants at individual schools “compete” for part of the pool of funding that the school can offer this year. With that, it is smart to research and apply for as much independent funding, in the form of grants, fellowships, and scholarships from sources outside of the university as you can. If you’re currently working, it’s also worth determining if your company or organization offers Employer Tuition Assistance. These programs are typically managed through Human Resources and the award amount is completely determined by the company. It can range anywhere from $500 to $40,000 depending on how important continued education is to your company. However, tuition assistance over $5,250 is taxable by the federal government unless the program is work-related education. In that case, you would be able to claim a deduction. Make sure you do your research before filing your taxes for your first year of schooling.

Once you enroll 

Report any changes to your financial situation. Changes to your financial situation may include receiving outside awards or experiencing unforeseen financial hardship since applying for financial aid. Reporting changes immediately will allow the financial aid office to work with you to adjust your award package as necessary. If you need additional financial aid, staff can help you figure out what options are available either in the form of grants or loans.

If you are supplanting financial aid with outside awards, contact the Financial Aid office to make necessary adjustments to your financial aid package. One thing to keep in mind when reporting outside aid is that it will not be added on top of your financial aid package, but it will be re-calculated into your need, or EFC. In general, if you demonstrate “need,” the financial aid office at your school will try to get eliminate loans that are unsubsidized and/or have higher interest rates.

Thinking about the cost of a graduate education can be very stressful. Your financial aid award will depend on many factors that you can and cannot change. Also, recognize that the financial aid staff are people too, and that your stress can affect how you interact with them, and how they will respond to you. Their job is to help you, so help them help you. Do your part by applying early, applying for outside aid, and being professional, friendly, and appreciative in your interactions with financial aid.