New America Foundation report warns of ballooning graduate student loan debts
A New America Foundation report released today found that graduate and professional degrees account for 40% of the $1 trillion in outstanding student loans, suggesting that expensive post-college degrees are driving the student loan debt crisis.
“Debt for students who earned a range of master’s and professional degrees has surged in recent years and the trend gained significant momentum in the years between 2009 and 2012,” according to New America Foundation, a progressive think tank.
The report analyzed 2004, 2008, and 2012 data from the U.S. Department of Education’s National Postsecondary Student Aid Studies.
The report estimated that the median debt of all graduate borrowers in 2012 was $57,600 – a 43% increase from 2004 when the median debt was $40,209.
Below is the breakdown of the typical debt load of students pursuing graduate and professional degrees in 2012:
- Medical or health science degree: $161,772 with a typical monthly payment of $1,365 (a 31% increase from 2004 when the debt load was $123,203);
- Law degree: $140,616 with a typical monthly payment of $439 (a 58% increase from 2004 when the debt load was $88,634);
- Master of Arts degree: $58,539 with a typical monthly payment of $494 (a 54% increase from 2004 when the debt load was $37,965);
- Other Master’s degree: $55,489 with a typical monthly payment of $468 (a 75% increase from 2004 when the debt load was $31,650);
- Master of Education degree: $50,879 with a typical monthly payment of $429 (a 65% increase from 2004 when the debt load was $30,726);
- Master of Science degree: $50,400 with a typical monthly payment of $425 (a 44% increase from 2004 when the debt load was $34,965);
- Master of Business (MBA) degree: $42,000 with a typical monthly payment of $354;
New America noted that pace of graduate school financing is not sustainable. Part of the reason driving up cost is the lack of federal loan limits for graduate degrees and federal government policies adopted in 2007 and 2010, such as the Income-Based Repayment, Pay As You Earn, and Public Service Loan Forgiveness, that allow “borrowers repay those loans based on a small share of their incomes, regardless of their debts” and then forgive the remaining balance after 10 or 20 years.
New America warned that these federal policies may leave taxpayers on the hook for subsidizing increasingly expensive graduate degrees in the years to come.
“The debt statistics in this New America report suggest that graduate and professional students are likely borrowing at levels that will lead to substantial waves of student loan forgiveness in the coming years,” according to the report.
- NewAmerica.net: The Graduate Student Debt Review
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