Undergraduates are applying to graduate school in record numbers, but is it worth the cost?

Emily Bartelheim

News Editor

This year, student loan debt will exceed $1 trillion, surpassing even credit card debt, according to USA Today. Loans have increased by 500 percent since 1998 and still continue to rise (The Huffington Post). In fact, just from the 1994-1995 academic year, average tuition for public and private undergraduate colleges has more than doubled. After reading all these statistics, a big question jumps out: is secondary education really worth the cost?

Student loans are currently the number one source of household debt. The average in-state tuition and fees at four-year public colleges rose $631 this fall, or 8.3 percent, compared with a year ago. Nationally, the cost of a full credit load has passed $8,000, an all-time high.

According to Wooster’s website, tuition plus room and board is officially $45,668 this year, $8,675 above the average tuition cost for private colleges. However, 90 percent of students at Wooster receive some kind of financial assistance — the average financial aid package given to students sits around $24,820.

While the average financial aid given is more than half of tuition, last year’s graduating seniors owed just under $19,000 on average for all four years, said David Miller, director of financial aid. “Over the past decade, more students are borrowing federal Stafford Loans because the federal eligibility requirements have been loosened,” he said. “They are able to borrow slightly larger amounts because of slight increases in the annual loan ceiling, especially for sophomores.”

This scenario may sound familiar: a student attends a highly-ranked college and racks up $60,000 in student loans only to secure a job that pays $35,000 a year. How is one to pay off all that debt?

Chad Stonebrook, a ’09 graduate of The College of Wooster, claims he has amassed a “mortgage-worth of debt.”  Though he is married to someone currently in medical school, he reflects that even though his wife (and he) are future doctors and lawyers of America, they face an “incredible student loan debt [that he and his wife] will likely be paying for decades.”

“I think that Washington has done some encouraging things to help ease this burden, but none have addressed the problem as a whole,” says Stonebrook. “First, Obamacare [the Affordable Health Care Act] has allowed young Americans [Ed. Note: to the age of 26] to remain on their parents’ healthcare after college.”  Additionally, Stonebrook is appreciative that “Obama has recently advocated that student debt payment to the federal government to be reduced to 10 percent of income from its current 15 percent, and that all student loans be forgiven after 25 years.”

While attaining higher education in the past has greatly improved one’s chance at employment, it is now looking to be just the opposite. According to The New York Times, the jobless rate for college graduates in April 2010 was eight percent. Generally, people apply to graduate schools to improve their education with the hope of attaining a better job, but it is more so the case now that there is no other option. One can graduate from an undergraduate school and find nothing due to the poor job market, so in order to avoid this jobless situation, they apply to graduate school.

Post-secondary education enrollment has risen exponentially over the past decade due to attempts to enhance their options for future jobs, when in fact, debt ends up accruing so quickly that it is difficult to pay off once a job is obtained. Five years after graduation, between 50 and 55 percent of graduates will have earned, or will be in the process of earning, a graduate degree. To narrow that down, 18 to 20 percent of The College of Wooster students go on to graduate school right after graduating. For the years 2010-2019, NCES projects another nine percent increase.

The average student graduating from a four-year undergraduate college has a debt of $24,000. To help aid in this financial conundrum, last week President Obama proposed an improved income-based repayment plan to allow millions of student loan borrowers to lower their payments and consolidate their loans: Income-Based Repayment (IBR). The relief plan will reduce monthly payments to 10 percent of individuals’ income, putting more disposable income in peoples’ pockets (whitehouse.gov). If their loans are not completely repaid after 25 years, the rest will be forgiven. However, “The Atlantic,”
a Boston-based magazine, has recently done analysis that suggests that the average reduction in payments will only be between $4 and $8 a month.

U.S. Education Secretary Arne Duncan gave a “real-life” example in a CNN interview: Say a nurse earns $45,000 a year and has $60,000 in student loans. Her monthly payment would be $690, but with IBR would only be $239. This would save her $451 per month, as well as improve the economy. The aim of IBR is to give the economy a jump-start immediately instead of waiting; it was planned to begin in 2014, but Obama’s new “Pay As You Earn” proposal will fast-track the initiative to begin next year.