The Grad School Debt Problem

Of the $1.19 trillion in student debt in the U.S., 40 percent belongs to graduate students, who account for just 14 percent of the college population. While undergrads are capped at $57,500 total in federal student loans they can take out to prevent them from borrowing too much, federal student loan programs allow grad students to borrow any amount they need to cover what their schools charge, and that amount often reaches six figures. The Wall Street Journal explains the problem:

Propelling the surge in grad-school debt is a welter of federal programs that make it easy for students to borrow large amounts, then to have substantial chunks of those debts eventually forgiven. Critics of the system say it makes it easier for graduate schools to raise tuition, and for some high-earning graduates such as doctors to escape debts they can afford to repay.

“What we’re doing is randomly subsidizing lots of people without careful thought,” says Sandy Baum of the Urban Institute think tank, who has advised Hillary Clinton’s campaign. “That’s just really problematic.”

The Journal talks to a young couple who owe a combined $692,000 in federal student debt from medical school. Though both will earn six figures, they plan to pursue jobs at a nonprofit hospital so that they can qualify for forgiveness. Critics argue that institutions benefit from public service loan forgiveness by collecting high tuitions, leaving taxpayers to foot the bill. The couple points out that they wouldn’t have been able to pursue medical school if programs like income-based repayment and forgiveness didn’t exist in the first place.

I’ve got a bunch of loans from grad school that I’ll be paying off until I’m 40 (but hopefully sooner!), but am fortunate that my interest rates are humane and my payments are manageable enough that I don’t feel weighed down by them.

This story is part of our College Month series.

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