Credit and Your Grad School Plans

You’ve made the decision to keep your studies going – congratulations! With an increasingly competitive job market, additional education can be just the booster rocket you need to drive your resume to the top of the pile. Postgraduate education is a worthy goal, but one that often takes some adjustments to realize. Going back to school – or staying in the groove beyond your undergrad studies – can cause ripples in your financial world, too. Used the right way, your good credit habits may be a helpful part of your right financial plan for grad school. How can they help?

Government Assistance for Grad Students

With higher education costs spiraling in the United States, more and more students must choose to finance their graduate studies. According to, students can qualify for several types of federal aid including:

•    Grants: Like scholarships, grants are monetary gifts that generally don’t have to be repaid
•    Loans: Money that you borrow for school, which must eventually be repaid with interest
•    Work-study: Income you earn specifically to pay for your education (typically in some kind of field-related employ)

Additionally, the PLUS loan program, which is available to individual graduate students, reviews an applicant’s credit history before approving his or her request for a loan.

How Does Your Credit Activity Factor In?

If you’ve been responsible with your credit utilization in the past, your good credit behaviors could help you qualify for personal loans with better rates and conditions than other popular federal school loans. Some national banking institutions offer students competitive rates and can help supplement the additional educational costs not covered by scholarships, grants or other federal aid programs.

If you think that your credit history might pose a challenge to being accepted into the right program, you could be right. While your academic performance might get you an acceptance letter into the school of your choice, solid scores will likely come into play if you plan to finance your way toward your next degree. Make sure you check over your credit report for any inaccuracies, and work to correct any you discover. While financial aid and federal loans might assist with some of the costs of school, you may need to fall back on some of your credit to cover the rest. If your scores aren’t in top shape, you could miss out on financing or it may require you pay higher interest rates than top-shelf scores would require.

School Loans Can Have a Positive Influence on Your Scores 

Student loans, federal or private, are considered installment loans and can help bump up your scores if you make your payments on time. However, if you miss payments, that activity will likely negatively impact your credit across the board. Installment loans – like educational lending – are often seen as a good litmus test for your accountability with credit. Since they require your regular activity each month, they can be a great place to show off your consistency at making payments on time. Doing just that can show to lenders (and others who check your credit) that you’re handling things smoothly from month to month over time.

If you think you’re at risk for missing a payment, contact your lender sooner rather than later. Some lenders can offer income-based repayment options to avoid default or interest rate hikes. If an account is listed as deferred, that could hit your credit report hard and lower a grad student’s chance for future lending.

Hitting the books on your credit before grad school can help you bring your financing picture into clarity. Then all you have to focus on is the learning – that’s the easy part, right?


This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.