As a hopeful psychology student, it’s probably not hard to psychoanalyze your own feelings about money: it stresses you out, it makes you anxious, it worries you. In fact, financial fears may impair your ability to function optimally, says the American Psychological Association, quoting a 2012 study in Training and Education in Professional Psychology.
With so much riding on sound monetary decisions, it’s important to make a solid financial plan before you start your degree program. A huge factor in this plan will be financial aid. The exact type of aid you receive will depend on multiple factors, including:
- Where you attend school
- The type of degree you are earning, and how many years you will be in school
- How much you can afford to pay toward the degree yourself
- Whether you plan to work in school
- How many scholarships and grants (free money) you are awarded
In order to correctly determine how much financial aid you will need, and therefore minimize fiscal stress both during and after school, you should determine these factors beforehand.
Types of Psychology Degrees
Psychology degrees are available at the associate’s, bachelor’s, master’s and doctoral levels. While you get will depend on the level of schooling you have already achieved and your specific needs.
For students who are just starting out, face economic hardship and are attending community college, this often means an associate’s degree. This is a good way to get your feet wet in a public health field and determine if you wish to continue at a four-year institution to get your bachelor’s degree.
Many students also start at a four-year university to get a psychology degree. This type of degree can prepare you for work in schools, physician’s offices and rehab centers, or for a career in social work, career counseling or psychiatry. However, the income possibilities and range of career options are significantly higher at the graduate level.
With a master’s degree, you can open your own practice as a behavioral counselor or an addiction specialist, work with adults or children in a clinical setting, or join a government institution or business team. You could potentially find work as a researcher or professor at a university, but these posts tend to be harder to get without a Ph.D.
With the doctoral degree, you can snag a post as a professor, work in private practice, or research for a variety of institutions both public and private. You can also choose the closely related alternative doctorate of psychology. (Note that none of these degrees is the same as a degree in psychiatry, so you cannot prescribe medications to the people with which you work.)
When choosing your degree type, or whether or not to get it in the first place, consider the average costs of each program. While undergraduate tuition averages between roughly $9,000 and $32,000, depending on the school and whether you have in-state status, graduate tuition usually ranges around $20,000 or more.
Once you’ve figured out which degree type will suit, you can start looking for financial aid. This differs slightly for undergraduate and graduate students, so we’ll break down the various possibilities below.
I. Federal Student Loans for Psychologists
Federal loans are the most economical way to borrow money for school. They tend to have lower interest rates than private institutions (though this is not always the case). Interest rates are also fixed, as opposed to other institutions, which may have variable rates you can’t lock in. In addition, federal loans tend to have more generous repayment terms and a larger number of alternative borrowing schedules from which to choose. In order to borrow federal financial aid, you will need to fill out a Free Application for Federal Student Aid, or FAFSA.
Once you’ve been accepted to an undergraduate program (associate’s or bachelor’s degrees), you can fill out a FAFSA to qualify for the following loans:
- Direct Subsidized or Direct Unsubsidized Loans (available to everyone)
- Federal Perkins Loans (must have considerable financial need)
If you’re getting a Ph.D. or a master’s, you will need to apply for graduate financial aid. These loans include:
- Direct Unsubsidized Loans (note that graduate students are NOT eligible for subsidized loans, in which the U.S. Department of Education pays the interest while you are in school at least half time.
- Direct PLUS Loans (available only to students in a graduate or professional degree program)
- Federal Perkins Loans
Once you’ve graduated, you have the option of consolidating your loans. If you qualify, this means you will have only one payment instead of several, and usually has the effect of lowering the overall amount you pay. It also allows you to convert to a fixed interest rate any loans that were not fixed before. However, because it lowers payments and continues for longer, you will be paying more interest over time, and the overall amount you pay will probably be higher.
Note that you do not need to accept the full amount that you are offered in your award letter. You may decide that you need less than is offered to you – perhaps because you are working, receiving assistance from your parents, or have saved money – in which case you can feel free to decline part or all of the loans offered to you. Also note that not all federal loans have the same terms or require the same qualifications, so choose the loans most favorable to you.
Student Loan Forgiveness for Psychologists
As potential members of the public health force upon graduation, psychologists have a special opportunity to earn loan forgiveness, which is when the federal government clears their Direct Loans debt after meeting certain qualifications:
- You are required to make 120 payments, which must be on time, according to the schedule set out in your Direct Loans. Only payments you made after October 1, 2007 will be counted.
- You must make those payments under a repayment plan that qualifies for student loan forgiveness.
- You must work full-time at a qualifying public service institution at the time that you make all of your payments.
If you meet all of these requirements, you will be eligible to receive loan forgiveness on your Direct Loans. However, this will still leave other loans outstanding.
Wondering about the definition of a qualifying public service institution? According to the terms of the loan forgiveness program, “Qualifying employment is any employment with a federal, state, or local government agency, entity, or organization or a non-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS) under Section 501(c)(3) of the Internal Revenue Code (IRC).” This may include public health clinics, schools, non-profits and others. To find out more about which public institutions qualify, you can read more here.
As a psychology graduate, you may also qualify for the National Health Service Corps Loan Repayment Plan, which is administered by the Bureau of Health Workforce (BHW) in the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) and seeks “to provide culturally competent, interdisciplinary primary health care services to underserved populations located in selected Health Professional Shortage Areas.” If this is work you are willing to perform, you might be eligible for the program. To reap the benefits of this loan repayment program, you can either:
- Serve two full years at a qualifying practice, in which case the NHSC will pay up to $50,000 toward your student loans, or
- Serve two half-time years at a qualifying practice, in which case the NHSC will pay up to $25,000 toward your student loans
Alternative Repayment Plans
Most student loans are automatically set to 10-year, fixed-rate repayment plans. However, you have many alternative repayment options that can help you make payments in a way that meets your schedule, financial needs and lifestyle better. Repayment plans include:
- Graduated Repayment Plan: Lower payments at first give way to higher payments, but the plan is still only 10 years maximum
- Extended Repayment Plan: Fixed or graduated payments with a maximum term of 25 years
- Income-Based Repayment Plan: Payments will be a maximum of 15 percent of your discretionary income, and change as your income changes, up to 25 years
- Pay As You Earn Repayment Plan: Payments will be a maximum of 10 percent of your discretionary income, and change as your income changes, up to 20 years
- Income-Contingent Repayment Plan: Payments recalculated every year depending on your income, family size and loan amount, up to 25 years
- Income-Sensitive Repayment Plan: Based on annual income, changing as your income changes, up to 10 years
Which of these works for you will depend on how much aid you take out, how much income you have, your lifestyle and family status, and the preferred length of your repayment plan. Keep in mind that when you choose alternative repayment plans, you may not be eligible for loan forgiveness. Only the Income-Based Repayment Plan, Pay As You Earn Repayment Plan or Income-Contingent Repayment Plan qualify for public service loan forgiveness.
II. Private Loans for Psychology Students
Students at all levels are eligible for private loans. This is when you borrow from a private institution instead of the federal government, and while the rates tend to be less favorable and the repayment terms less flexible, they are a good option for students who do not receive as much as they need from the government.
Sallie Mae, for instance, provides private financial aid to undergraduate students. Be sure before taking out private aid that you fully understand the repercussions of the choice, including how it will affect your credit and financial well-being if you default and what your other options are. Note that just as with federal loans, you do not have to take out the full amount offered to you.
You can also get student loans through other lending institutions, such as banks and credit unions. To do so, make an appointment with a loan officer (and a co-signer, if necessary, as many undergraduate students lack the credit to apply for private loans), and be sure you fully understand the terms of the loan before signing and accepting.
III. Scholarships for Psychologists
Scholarships essentially amount to free money, which you receive without any need for later repayment. Many public and private institutions grant scholarships to deserving students, and they are either merit-based, need-based or both.
The American Psychological Foundation offers several scholarships to graduate students. Some scholarships are offered specifically to women, while others may be offered based on gender, race, merits, economic factors, location, institution or other criteria.
The Psychology Access Scholarship is a great option for undergraduate and graduate students interested in pursuing Psychology, Counseling, Therapy or Social Work degrees. It's merit-based offered at $1,500.
Our scholarship database below will give you the opportunity to explore your scholarship opportunities in more detailed fashion, based on criteria such as
- Minimum GPA
- Enrollment levels
- Sponsored by school
- And others
Since scholarships do not need to be repaid, it is smart to apply for as many as possible.
IV. Grants for Psychologists
Much like a scholarship, you do not need to repay a grant, but grants more often come with strings attached. These can include requirements to work at a qualifying institution or perform certain work upon graduation. Grants are available at the state, federal or school level.
Many institutions offer grants for qualifying psychology students at any degree level. Check with your institution’s financial aid office to determine if your school offers grants to psychology students, and make sure you apply by the deadline, as it is extremely unlikely that you will be considered if you miss it.
Students in undergraduate psychology degree programs may qualify for the following grants:
- Federal Pell Grant (available to students with an economic hardship)
- Federal Supplemental Educational Opportunity Grant (also available to students with an economic hardship)
- Iraq and Afghanistan Service Grant (very specific eligibility requirements for a parent who died in the service)
The American Psychological Foundation also funds several grants for psychology students. You may also receive grants for a special talent, academic excellence, need or other qualifying factors. Check with your state’s board of education to determine if any additional grants exist that might help you defray the cost of school.
V. Scholarship Database
Even if you do receive a lot of financial aid, it may still seem daunting to commit to higher education, given the huge amounts of debt you will likely incur. This intimidation is natural, but don’t let it stop you from earning the degree you deserve.
Below you will find a list of some of the best scholarships for psychology students. Run a search to figure out which ones you might qualify for, then apply to as many as you can. There is no limit on the number of scholarships and grants you can apply for, so make sure to examine all possible options before taking out loans. Send in your applications in plenty of time to hear back from the scholarship committees so that you can borrow the correct amount of financial aid when you get your loan award letter.
Ready? Get searching!