Grad Students Driving the Growing Debt Burden

March 25, 2014
Wall Street Journal 
student loan news
Widely available government credit and a weak economy have contributed to a recent surge in student loan debt for those pursuing graduate degrees, according to a new report by the think tank New America Foundation.

The typical debt load of borrowers who graduate with a master's, medical, law, or doctoral degree rose 43 percent -- adjusted for inflation -- between 2004 and 2012, the report found. That translates into a median debt load of $57,600 for 2012, with growth rising even more for certain areas of concentration. Compared to graduate students, the typical burden for those who left school with a bachelor's degree rose 39 percent over the same period to $27,000.

New America Foundation also discovered that in the 2012-13 academic year, graduate students accounted for about one in six student loan recipients but represented between 30 percent and 40 percent of federal student debt. Policymakers and student advocates are becoming more concerned about students who leave school with high debt and have trouble finding jobs, then fall behind on payments. Such consumers often have damaged credit that limits their ability to purchase homes and cars.

The paper suggests that the biggest overall drivers of student debt have been costs linked to for-profit schools and graduate schools. "Graduate schools have essentially found a way to capture more of someone's future income and future spending than what would probably occur if we had some sort of underwriting standards and loan limits," said study author Jason Delisle.

The think tank has made several recommendations that include the Obama administration placing tighter limits on how much student debt it forgives in an income-based repayment program. A 2006 law removed a limit on how much graduate students may borrow from the federal government, though undergraduates still face a lifetime borrowing cap of $57,500.

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