Grad Students Are Driving the Growth of Student Loan Debt

Ballooning student loan debt is a hot topic these days. If you’re like me, you think unaffordable undergraduate degrees are driving the soaring debt. But that’s not the case.

A recent report indicates that graduate and professional students are disproportionately contributing to America’s trillion-dollar student debt.

The report was done by New America, a Washington, D.C.-based public policy think tank. It found that 40 percent of federal student loan dollars go to postgraduate students, even though they make up only 20 percent of higher-ed students.

Graduate school debt goes beyond what we understand are as high-cost credentials, like medicine and law. New America’s Jason Delisle wrote in a summary of the report:

According to the data, in 2004, the median level of indebtedness for a borrower who earned a master of arts degree was $38,000. In 2012, that figured jumped to $59,000, after adjusting for inflation. Debt levels for other master’s degrees, such as a master of science or a master of education, show similar trends. For borrowers at the 75th percentile of indebtedness, the increases are even larger in absolute terms. For most master’s degrees, debt at the 75th percentile jumps from about $54,000 for degree recipients in 2004 to $85,000 in 2012, after adjusting for inflation.

Delisle told InsiderHigherEd that things are out of control when it comes to graduate student debt.

“You’ve got people who are borrowing these amounts knowing that they are more likely than not going to use these programs,” he said, referring to the loan forgiveness provisions of federal income-based repayment plans and Public Service Loan Forgiveness.

Delisle has for several years pushed for the government to curtail the benefits those programs provide to graduate students, which he describes as a “windfall.”

According to Money, graduate school can cost more than it’s worth, both in debt and years out of the workforce. Money said you should consider the following before investing your time and money in an advanced degree program:

• Can you pay off your student loans? If you earn a law or medical degree, you’ll likely be able to pay off your loans. But how about a liberal arts degree? Money suggests this: “Look into average starting salaries for your desired field before you apply. Then plug in your numbers using this LearnVest calculator.”
• Will you use your degree? It’s a financially dangerous move to go to grad school because you don’t know what you want to do with your life. You should have a clear goal and backup plan in place before applying for school, Money said.
• Do you need it? “A recent Georgetown University report shows that a graduate degree does not boost incomes uniformly: If you are a biology or life sciences concentrator, your income could jump more than 100 percent, but in the arts, you’d get only a 23 percent boost,” Money said. If your desired field doesn’t value an advanced degree, you’ll likely be wasting both your time and money earning one.

Were you surprised to see the percentage of student loan debt that can be attributed to grad students? Share your thoughts below or on our Facebook page.