While most of the attention on the soaring cost of college tuition has focused on those seeking bachelor's degrees, debt loads for graduate and professional schools also have surged in recent years, according to a new report by the New America Foundation.
Using federal data, liberal-leaning think-tank estimated that about 40 percent of the $1 trillion dollars in outstanding student loans can be traced back to graduate and professional degrees. With more Americans believing that a graduate or professional degree is important in today's job market, the price of these programs has increased, along with borrowing.
Students who obtained a master of arts degree graduated with the highest average level of debt. In 2004, students who obtained this degree departed with $38,000 in debt. In 2012, after adjusting for inflation, the median amount owed for these grads jumped to $58,539. Among professional schools, medical-school debt was the highest at $161,772, while typical law school debt was $140,616.
According to the report, one in 10 borrowers recently left graduate school in 2012 with a combined grad/undergrad debt of more than $153,000.
Unlike loan programs for undergrads, graduate students can finance their entire education with federal college loans. These students can take out $20,500 per year in federal direct unsubsidized loans, and the rest of the cost can be covered by a federal Direct PLUS Loan.
For those thinking about attending grad school, here are some ways to shrink the cost:
Look for money at the department level. Obtaining aid as a graduate student is much different than for undergrads. When teenagers apply to college, they are automatically in the running for need-based aid or merit scholarships. For graduate school, however, academic departments will often dole out the money. The awards are typically based on merit. You should contact the academic department and the appropriate contact within a grad school to determine what money is available and how to apply for it.
Study for the Graduate Record Examination. Grad schools will pay attention to your undergrad grade point average and your score on the GRE, so it's worth studying hard for the exam.
Look for fellowships. Private and public organizations offer fellowships in a wide array of disciplines, including the humanities, education and the sciences. The University of California, Los Angeles maintains a fellowship database, as does Cornell University.
Check the fine print. If you are offered a scholarship from a graduate or professional school, find out what it takes to hold onto that award. Some schools design these awards so that a large percentage of students lose them after the first year.
Complete the FAFSA. You won't be eligible for any federal loans without submitting the Free Application for Federal Student Aid.
Educate yourself about repayment plans. Graduates with a lot of federal debt may be eligible for federal repayment programs that will allow them to pay off the debt based on what they earn rather than what they owe. The best federal program is called Pay As You Earn.
Rethink your desire to attend grad school. A graduate degree is too often the default move when college students don't know what to do after earning a bachelor's degree. It's no wonder that 40 percent to 50 percent of grad students drop out of their programs. Graduate school is rarely a smart idea for someone who has no career plans.