Student Loan II

The following table shows the percentage borrowing and average amount of cumulative debt per borrower among graduating students according to degree program. It provides the amounts borrowed for just the graduate education and also the combined totals for undergraduate and graduate education. Undergraduate students who graduate with a Bachelor's degree and no debt are 1.7 times more likely to enroll in graduate and professional school than Bachelor's degree recipients who graduate with some debt.

All Students Graduate Education Debt All Education Debt
(Grad & Undergrad)
Graduate & Professional Degree Programs Percent Borrowing Cumulative Debt Percent Borrowing Cumulative Debt
Total 56.4% $40,297 69.6% $47,503
Master's Degree 55.2% $31,031 69.4% $40,208
Doctoral Degree 45.8% $57,860 56.3% $58,967
Professional Degree 86.2% $87,308 87.9% $98,711
Master of Business Administration (MBA) 55.5% $31,927 68.9% $41,676
Master of Social Work (MSW) 72.3% $35,516 77.7% $49,017
Master of Science (MS) 49.8% $30,684 63.5% $40,362
Master of Arts (MA) 60.8% $29,975 73.7% $40,500
Master of Education or Teaching 55.9% $26,487 74.5% $35,946
PhD 35.4% $44,995 48.0% $45,455
EdD 65.1% $43,812 73.3% $44,880
Law (LLB or JD) 88.6% $80,081 88.6% $92,937
Medicine or Osteopathic Medicine 81.9% $119,424 83.2% $127,272
Pharmacy (PharmD) 82.2% $63,412 85.0% $81,838

The following table shows the percentage of graduating students at graduate and professional institutions who applied for federal student aid and graduated with debt and the average cumulative debt at graduation according to degree program. This demonstrates that graduating with debt is unavoidable for students pursuing degrees in law, medicine or business who need to apply for federal student aid.

Submitted FAFSA Graduate Education Debt All Education Debt
(Grad & Undergrad)
Graduate & Professional Degree Programs Percent Borrowing Cumulative Debt Percent Borrowing Cumulative Debt
Total 94.3% $46,865 96.9% $62,285
Master's Degree 94.5% $34,741 97.7% $51,223
Doctoral Degree 82.8% $73,885 85.0% $85,366
Professional Degree 99.4% $92,575 99.9% $105,705
Master of Business Administration (MBA) 98.2% $34,691 98.9% $53,779
Master of Social Work (MSW) 91.9% $36,924 91.9% $54,020
Master of Science (MS) 95.2% $34,824 98.3% $52,102
Master of Arts (MA) 94.0% $34,357 97.4% $50,102
Master of Education or Teaching 92.6% $31,540 96.8% $49,286
PhD 67.5% $58,353 72.0% $69,754
EdD 94.5% $51,695 94.5% $61,121
Law (LLB or JD) 99.9% $82,601 99.9% $95,914
Medicine or Osteopathic Medicine 100.0% $126,152 100.0% $136,474
Pharmacy (PharmD) 100.0% $66,319 100.0% $88,648

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Student Loan FIgures I

The following table shows the percentage of students borrowing and average cumulative debt per borrower (excluding PLUS Loans) at graduation according to type of educational institution but not restricted by degree program.

Undergraduate Education Debt
Institution Level & Control Percent Borrowing Cumulative Debt
Overall Total (4, 2 and < 2 year) 58.8% $18,625
Public 49.4% $16,369
Private Non-Profit 69.7% $26,683
Private For-Profit 93.1% $17,162
4-year Total 66.5% $22,656
4-year Public 61.1% $19,839
4-year Private Non-Profit 70.6% $27,349
4-year Private For-Profit 97.0% $24,635
2-year Total 44.8% $12,307
2-year Public 37.2% $10,444
2-year Private Non-Profit 64.0% $14,790
2-year Private For-Profit 97.6% $17,310
< 2-year Total 74.7% $10,172
< 2-year Public 36.1% $10,321
< 2-year Private Non-Profit 45.0% $10,990
< 2-year Private For-Profit 86.0% $10,123

Graduate and professional students borrow even more, with the additional cumulative debt for a graduate degree typically ranging from $30,000 to $120,000. The median additional debt is $25,000 for a Master's degree, $52,000 for a doctoral degree and $79,836 for a professional degree. A quarter of graduate and professional students borrow more than $42,898 for a Master's degree, more than $75,712 for a doctoral degree and more than $118,500 for a professional degree. At the 90th percentile cumulative debt for graduate and professional degrees exceeds $59,869 for a Master's degree, $123,650 for a doctoral degree and $159,750 for a professional degree.

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Student Loans

Few students can afford to pay for college without some form of education financing. Two-thirds (65.6%) of 4-year undergraduate students graduated with a Bachelor's degree and some debt in 2007-08, and the average student loan debt among graduating seniors was $23,186 (excluding PLUS Loans but including Stafford, Perkins, state, college and private loans). Among graduating 4-year undergraduate students who applied for federal student aid, 86.3% borrowed to pay for their education and the average cumulative debt was $24,651. (For just federal student loan debt, excluding PLUS Loans, the figures are 61.6% and $17,878.) Average cumulative debt increased by 5.6% or $1,139 a year since 2003-04. When one includes PLUS loans in the total, 66.0% of 4-year undergraduate students graduated with some debt in 2007-08, and the average cumulative debt incurred was $27,803. (About two in fifteen (13.5%) of parents borrow PLUS loans for their children's college education, with a cumulative PLUS loan debt of $23,298.)

These figures were calculated using the data analysis system for the 2007-2008 National Postsecondary Student Aid Study (NPSAS) conducted by the National Center for Education Statistics at the US Department of Education. (For comparison, cumulative education debt statistics from the 2003-2004 NPSAS are also available.) The 2007-2008 NPSAS surveyed 114,000 undergraduate students and 14,000 graduate and professional students. These statistics are not necessarily available from published NPSAS reports.

The median cumulative debt among graduating Bachelor's degree recipients at 4-year undergraduate schools was $19,999 in 2007-08. One quarter borrowed $30,526 or more, and one tenth borrowed $44,668 or more. 9.5% of undergraduate students and 14.6% of undergraduate student borrowers graduating with a Bachelor's degree graduated with $40,000 or more in cumulative debt in 2007-08. This compares with 6.4% and 10.0%, respectively, for Bachelor's degree recipients graduating with $40,000 or more (2008 dollars) in cumulative debt in 2003-04.

The following table shows the percentage of students borrowing and average cumulative debt per borrower (excluding PLUS Loans) at graduation according to type of educational institution but not restricted by degree program.

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Student Loans

An education loan is a form of financial aid that must be repaid, with interest. (Scholarships, on the other hand, do not have to be repaid.)

Education loans come in three major categories: student loans (e.g., Stafford and Perkins loans), parent loans (e.g., PLUS loans) and private student loans (also called alternative student loans). A fourth type of education loan, the consolidation loan, allows the borrower to lump all of their loans into one loan for simplified payment. A recent innovation is peer-to-peer education loans. Federal education loans are available in either the Direct Loan or federally-guaranteed student loan programs.

Federal law sets the maximum interest rates and fees that lenders may charge for federally-guaranteed loans. Nothing prevents a lender from charging lower fees. Many lenders offer a variety of student loan discounts to attract borrowers.

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Four Loan Tips

Four Loan Tips
Times are tough for lenders and borrowers. These tips can ease some of the pain:

Apply early.

A growing number of lenders are mulling over leaving the student loan business, so counselors are advising families to line up a lender by early July. To find one, try the Education Finance Council, or use Web tools such as the one at usnews.com/payingforcollege.

Stick with the federal loans,

if possible. Students who limit their borrowing to Stafford and Perkins loans won't graduate with burdensome debt loads and won't see their bills jump if interest rates rise. These loans might also be forgiven for those who take a public-service job.

Read the fine print.

The Federal Reserve's slashing of interest rates makes many private educational loans seem low. But payments will increase when interest rates rise again, as they inevitably will.

Be realistic.

Before borrowing big bucks to train for fairly low-paid careers such as social work, teaching, or cooking, compare the average salary with your total education loan payments. If what's left isn't enough to live on, try cheaper schools that would require less borrowing.

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Insurance

# Insure yourself against financial ruin. There should be no higher financial priority in your life than health insurance. Without it, if your health takes a turn for the worst, hospital bills could easily bankrupt you and your family. # High deductible is your friend. Keep those monthly premiums as low as you can. # Don't use insurance as an investment vehicle. Liquidity and certainty are not on your side. # Have enough. Have enough life insurance to replace at least five years of your salary, ten years if you have kids or significant debts. # Don't have too much. You need health insurance. If you're single and have no dependents, you don't need life insurance. # Think about insurance before you buy a car. Typically, the more expensive your car, the higher your insurance cost will be. Take this into account when buying a car. # Choose the right car insurance. Don't assume you should get the cheapest auto insurance or the one with the most protection. Find out exactly how much coverage you need. # Consider dropping collision coverage. Especially if you have an older car, there's not much sense in protecting it against getting wrecked if it's already a wreck. # Buy homeowner and auto coverage from the same insurer. You'll usually get a better deal than you would if you bought the two separately. # Write a will. If you have any dependents, you need a will. Write one and protect your loved ones.

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Career and Education

1. Get educated. A college education always pays for itself and more. In 2004, bachelor's degree holders earned an average of $51,206 per year, while high school graduates earned only $27,915, according to Census data compiled by HighBeam Research. 2. Your career is your most valuable asset. Manage it with a higher priority than you would with any other investment. Remember that without this asset, you couldn't survive. 3. Save enough. You should try to save enough to cover at least one-third of your kids' total college costs. 4. Consider public schools. Especially for college, state schools can often times be just as prestigious, if not more, than private schools. 5. Consider community college or online college for your first year or two. You can then transfer these credits to a more expensive (and prestigious) school to finish your final two or three years. 6. Invest in a 529 college savings account. It's tax-free. What more needs to be said? 7. Ask for a raise. Use the Salary Wizard Calculator to see if you're making as much as you should. If not, consider asking for a raise, especially if you've been at the company for more than a year. 8. Get a professional certificate. Some professions offer a certificate that, if earned, will generally provide you with a higher salary. 9. Don't major in English. If you love studying English, there's nothing wrong with that. Just be aware that English majors generally don't earn very much. Six of the top ten list of majors with the highest salaries are engineering majors, with chemical engineering topping the list.

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