When many think about student debt crisisthey think of eye-popping six-figure debt.
But “many of these large numbers end up being outliers or graduate students who have accumulated [debt] based on continuing education, “says Rick Castellano, vice president of corporate communications for Sally May. He says undergraduate students rarely borrow more than $ 100,000.
Americans today collectively owe more than $ 1.7 trillion dollars of student debt. US student debt increased by more than 100% in the last 10 years and the fastest growing category of student loans are loans received by graduate students.
Brookings it is estimated that although only 25% of student loan borrowers attended graduate school, these students account for about half of all outstanding student debt.
IN average student debt for a person with a bachelor’s degree – $ 28,950. But that’s $ 66,300 for an MBA, $ 71,000 for a master’s degree, $ 145,500 for a law degree, and $ 201,490 for a medical degree.
It is regularly argued that graduate students take more loans because they can expect to earn more, which is often true. Workers with a master’s degree earn an average of $ 1,545 per week, while workers with a professional degree (such as JD or MD) earn an average of $ 1,893 per week. Bureau of Labor Statistics estimates.
However, those with only a bachelor’s degree earn about $ 1305 per week, while those with only a college degree earn about $ 781 per week on average. Workers with advanced degrees also have significantly lower unemployment rates.
The pandemic has drawn attention to the toll of many healthcare workers who have some of the highest student debt. New York Congresswoman Caroline Maloney even introduced a bill eliminate the student debt of medical professionals treatment of patients with coronavirus.
More recently, some elite graduation programs have undergone rigorous scrutiny for abandoning graduates burdened with huge amounts of student loans and without earning high enough earnings early in their careers to pay off their debts.
As the debt of graduate students grows, many are paying attention to this problem. Here’s a look at why these totals have increased.
One of the reasons for the increase in postgraduate student debt is that the number of graduate students has increased over the past 10 years.
Census data indicates that between 2000 and 2018, the number of people aged 25 and over who completed their master’s and doctoral degrees doubled. In 2000, 8.6% of the US adult population held an advanced degree – now the figure is approaching 13.1%.
In front of face sluggish wage growthmany young workers applied to graduate school in the hope of increasing their earnings. For many, graduate school has been an opportunity to narrow the entrenched wage gap.
One reason for this thinking is that women must earn one more degree than men in order to overcome some of the wage differences they face. 2018 Wage Difference Report from Georgetown Education and Workforce Center found.
“A woman with a bachelor’s degree earns an average of $ 61,000 a year, which is roughly the equivalent of a man with an associate’s degree,” the report said. “The same rule holds true for women with a master’s degree compared to men with a bachelor’s degree and for every subsequent level of education.”
For someGraduate studies can help close those gaps, but it also came at a price. In recent years, interest rates under the federal student loan program have climbed to 7.9%. Currently, they are set at 6.28%.
Another important reason PhD students are heavily indebted to students is because they can borrow unlimited federal student loans, says Adam Looney, Brookings senior fellow, non-resident, and professor in the Department of Finance and CEO of Marriner. S. Eccles. Institute of Economics and Quantitative Analysis, University of Utah.
The maximum federal student loans for undergraduate dependents is $ 31,000, but there is no limit. about how many graduate students can take, Looney says.
“A dependent undergraduate cannot borrow more than $ 31,000 in total federal debt in his or her entire college career. A graduate student can easily take it for one year, ”he explains.
Looney adds that graduate students often carry cumulative debt associated with their undergraduate careers.
“Plus, graduate students have been in school for more years, often borrowing money for both college and graduate school,” Looney says. “And many pay off their loans more slowly at first because any undergraduate loans are deferred during graduate studies, and some professionals, such as doctors, dentists, or PhDs, often enter residency or several years after doctorate before starting to formal practice ”.
“But I think the important factor is that graduate school is expensive and graduate students are allowed to borrow at full cost.”
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