Thursday, August 20, 2015

PUZZLE: Graduate students are only 14% of total; but account for 40% of debt

WSJ has the answer:  moral hazard

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.

But why don't we see this at the undergraduate level?

Federal programs allow grad students to borrow essentially unlimited amounts—whatever their schools charge—while requiring only a scant credit check and no assessment of their ability to repay. Other government loan programs, such as those for undergraduate students and home buyers, set loan limits to prevent borrowers from getting too deep into debt. Undergraduates are capped at $57,500 total in federal loans.



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  2. It’s tiresome to read all the expenses needed for professional school, and then to know the actual cost of just classes is mind-boggling! The fact that graduate schools barely offer scholarship, and no federal grants are given makes student drown in loans by the time they’re out of school. It’s as if it’s assumed that people graduate from undergrad, work and pay off loans and make some extra money and then go to grad school. When the reality is, that for most people grad school starts right after under-graduate school ends. Some programs even have the graduate portion as a continuation of the undergraduate part. The question should be why scholarships can’t be given at graduate level, and why interest rates are suddenly increased at graduate level. Many people entering grad school are in their early 20s, where are schools expecting all this money to come from. It’s incredibly discouraging.