Moving On Up: 5 Financial Secrets No One Tells You about Graduate School


By Katie Ranhorn

November 27, 2016

Funded! Receiving an award letter to graduate school is one of the (hopefully many) highs in an academic’s life. After a little dance in front of the mirror, though, another reality stares back: how to be an adult. How can a graduate student simultaneously juggle research, teaching, course work, and finances, all on a graduate student stipend?

As a low-income first-generation PhD student, I learned how to navigate the world of finances mostly through trial and error, the Internet, and mentors. After 5 ½ years, I have learned a few financial realities about graduate school that I wish someone had told me before I started. Here’s what you should know.

1. Moving there can cost you an arm and a leg.

When I first moved to Washington, DC, after living in Tanzania for 14 months, I arrived with two suitcases. I was lucky to have a friend from college, who had lived in the District for a year, agree to be my roommate and find our apartment. I slept on the floor for a week and on an air mattress for two more weeks. My first stipend check came in September, but TA training and classes started in August. Graduate fellowships rarely include moving costs. The flight to your new city? First month’s rent and security deposit? Furniture? All of this is up to you to cover, and together can easily cost over $2000. And no, these costs are not tax-deductible. If you don’t have a support network or savings, you may need to take out a loan. I did.

2. Research your city’s cost of living, and have a back-up plan.

Once the stipend starts coming in, the ideal thing is to start paying off any previous debt. You may find, however, that your living situation makes that difficult. In the District of Columbia the average rent per month with roommates is over $800. Want to live alone? Ha! The median one-bedroom is $2000. When I first read my award letter I thought, “I’m rich!”  I had never seen that much money with my name on it. Once I accounted for rent, however, even in my neighborhood (a 45-minute commute from the department where break-ins were a real threat), the amount remaining every month for food, transit, and bills left very little to pay off the student loan.

The issue is exacerbated when academics presume that all students have equally deep pockets. At Harvard in the 1960s, for example, a PhD student went to his advisor stating that he couldn’t afford to feed his family and pleaded for a fellowship. The advisor responded, “Sorry son, but sometimes we all have to dip into capital.”

Turns out, we can’t all “dip into capital”, or call home to help. If that’s you—read the additional resources at the end of this post.  

3. Health insurance is… complicated.

I had not been insured since I was 21 years old. Why? I couldn’t afford it. Student health insurance at GW costs ~$1700 per semester. This amount is due at the beginning of the semester, and I simply didn’t have that much in the bank, in addition to the moving costs mentioned above. Plus, to be frank, the school’s plan didn’t cover the basic needs that I was looking for, like dental and eye care. So I opted to pay out of pocket for health care, which was cheaper in the long run. What if I “got sick”? It was a risk I had to take. The Affordable Care Act has helped alleviate this. Now there are flexible plans I can enroll in, and don’t have to pay a lump sum every semester (Thanks Obama!).

If you are an international student, chances are your school will require you to have health insurance to maintain a F1 or J1 Visa. That means you MUST pay these costs, or else you can’t stay.

If you are a TA, you may have health insurance benefits. But what happens if, like many graduate students, you decide to take a semester abroad to collect data or write your dissertation (you know, the things we came here to do) and don’t TA? Those benefits disappear, and you may be stuck with the bill.

4. Got external funding? Chances are, it replaces your award, instead of extending it.

First let’s clear something up — there are two main kinds of external funding for graduate students: fellowships and grants.

1) Fellowships are usually paid in the form of a stipend, and they mostly pay for living expenses, and some supplies like books.

2) Research grants cover the cost of data collection like flights, lab equipment, or field expenses, and their disbursements can either be a lump sum, or in the form of advances or reimbursements.

Even if you have funding from your department, applying for external funding is imperative for several reasons. First, grant writing is central in academia, so you might as well get used to it. Second, writing the grant will help you frame your ideas and research. Third, if you get funded, it helps your CV. Determine which grants and fellowships are common in your field - remembering that your university will have internal opportunities too - and apply for all of them. As they say, you are rejected from 100% of the grants that you don’t apply for.

If you receive external funding, however, that does NOT guarantee that your internal fellowship clock stops ticking.  Example: Your department awarded you 5 years of funding, but then you received an NSF GRFP that paid your stipend for the second, third, and fourth years. At the end of your fourth year, you are alerted that you only have 1 year remaining of your promised 5-year internal award. “But, I paid for my stipend with an external grant! I should still have 4 years left from the department!”  Well, not necessarily. Some universities MAY allow you to “defer” a year of funding. Others have financial packages that are based on TA-ships, so if you can get a slot to teach, you can continue. You will need to do the research and ask your department to be sure.

Even if older colleagues were funded for an additional year, this doesn’t mean your department will have the same flexibility for you if their own funding sources or University guidelines have changed. This is what happened to me. Teaching may be an option for the spring (right when I am finishing up the dissertation and preparing to defend). Until then, I’m living on savings.

5. Start saving, and investing, as early as possible.

Remember above how I said there was very little at the end of each month? It doesn’t matter. Even if you only have $10 leftover, put it in a savings account. That’s $120 a year or $600 after 5 years. If you save merely $20 a month, that amount doubles to $1200 after 5 years, and so forth. Start an account with Mint to keep track of your income, spending, and savings, and also to set savings goals. Put away as much as you can. Your future self will thank you, and when you move to your next job, you may not have to sleep on the floor for a week.

To the East Side

Graduate school can be one of the most intellectually and emotionally challenging times in your life. You are honing your research skills, coming into your own intellectually, studying with internationally-renowned scholars, while feeling stressed, experiencing imposter syndrome. This is not a good time for financial burdens.

But they don’t have to ruin your career. The difference between a broke grad student and a non-broke grad student is not just family support (although it is a biggie). One key difference is privilege of information.  If you don’t already have a savings plan, a health insurance plan, or you are questioning how you will make do while you take a semester off from teaching to do research—ASK someone.

Bottom line: Do your research early. Know what to expect. And if you need help, don’t be afraid to seek it out. Your department has already decided to invest in you, and they want you to be successful. It will be hard to do that if your blood pressure is high from all that ramen you ate. When you finally receive your PhD, you’ll need a solid financial footing (and healthy mind and body) to put that baby to work.


Five (More) Secrets for Students without Outside Help:

This section is especially for my fellow students who don’t have outside help and are wondering how to juggle finances. I first highly recommend some introspection, for example, how growing up poor affects your spending habits as an adult. Once I got a grip on some of the mistakes I was making in my own budgeting, I was able to implement some of the steps below.

6. Consider paying slightly more in rent if it means saving money in other areas. The financial reality of your living location is a trade-off decided by two factors: 1) the cost of rent and 2) the cost of transit to work. Transit may be exorbitantly more if you live far away even if rent is cheaper there. In DC, it is often $150 a month or more. You may also find the 90 min commute each day on a train or bus takes time away from writing, cooking, or exercising.

7. Cook. Your. Own. Food. Almost every graduate student will tell you, “I don’t have time to cook!” I get that (see #6). But eating on the run can be very expensive. You can spend $8-14 a day on lunch or $2. Getting cheap produce and cooking up a storm on the weekends is one way to do it. Slow cooker recipes can take 10 minutes to throw together, and the rest is done while you write or study (and makes the winter much more bearable). Eat left overs for lunch, or just a PB & J with a banana. Amount saved? $5-10 a day = $150+ per month.

8. Think twice before happy hour. Want to blow off some steam with your friends? Don’t just go to a bar, where you’ll pay $4 for a beer or $7 for a cheese plate. Buy your own wine and cheese, or beer and wings, and have a soiree at someone’s house. Remember—just because all your friends are going out doesn’t mean you can afford it. They may have more savings than you, or they may be drinking on credit. You can save $20 easily and if it becomes a regular thing, it can add up to over $50 a month.

9. Don’t buy books. This one is tough for me to say: think twice before clicking “purchase” on Amazon. Is the book available as a PDF on Google where you can read the pages of interest? Does someone in your department have a copy of it? And—I know this one is crazy—does your library have a copy? I once went to the Library of Congress to read a textbook for a science class. The result? I saved $200 and got to study in the beautiful Main Reading Room.

10. Invest in your social support network. Aside from providing mental support and distractions from the blood, toil, tears, and sweat of graduate school, your social network is also able to benefit you financially. Share conference hotel rooms to offset costs. Their prior familiarity with the city that you will be moving to means they can offer advice about neighborhoods to live in, or have housing opportunities that you (as an outsider) are not familiar with (like rooming with another graduate student). Student scholars at other universities may let you to stay in their apartment. Don’t assume, and ask in advance!