In previous posts, I’ve discussed Millennial student debt trends. Millennials are overwhelmingly the population most impacted by student debt and have contributed to the rise in student debt. This is due to higher enrollment rates and, of course, higher college costs. Undergraduate college enrollment increased 37 percent from 2000 to 2010—not coincidentally during the Great Recession. Though it has fallen since 2010, enrollment is much higher now than in 2000. One of the other factors driving the rise in student debt that is often ignored is graduate school.
Graduate school enrollment similarly increased 36 percent from 2000 to 2010 but, unlike undergraduate enrollment, it has maintained and is predicted to continue to grow. During the recession, there were often stories of how college graduates were entering a poos labor market so instead they enrolled in graduate programs, like law school.
Why does that matter? As more students went to college and also went to graduate school, they increased their debt loads. While many love the anecdote of the graduate with six-figure student debt working in a coffee shop, that isn’t the normal situation. You see, undergraduate students have strict annual limits on federal loans prohibiting them from piling up those kinds of debt load. The average four-year graduate has less than $30,000 in student debt.
Graduate students, however, can borrow up to the full cost of attendance as defined by the college—a number that includes tuition, fees, and living costs. And that’s on top of their undergraduate debt. The table below depicts Millennial student debt for students who earned graduate degrees in the 2015-2016 academic year—including debt from both undergraduate and graduate degrees. As you can see, master’s degree students borrow less than those who pursue doctoral degrees, who are usually in school longer.
What this data shows is that even the graduate degree borrowers still often do not reach those six figure debt loads. In fact, only one degree level surpasses $100,000 in student loan debt—professional doctorates. “Doctor’s degree - professional practice” as shown in the is just a technical way of saying professional school graduates. Those degrees—MDs, DMDs, JDs, etc.—are the ones who become physicians, dentists, lawyers, and more, and they often end up earning six-figure salaries that ensure they can afford to repay the debt. The next highest level of debt is other doctorates (PhDs), with a median debt of about $55,000. Borrowers with a master’s degree have just under $50,000, on average, including their debt from undergraduate borrowing.
And these borrowers typically struggle less. High balance borrowers are the ones with degrees and have an easier time repaying their loans. The average balance for those who are delinquent ages 25 to 34 (the vast majority of Millennials) is about $10,000 less than those who are current on their loans.
Increased enrollment in both undergraduate and graduate programs has resulted in more people with student loans, and at higher balances. Of course, that has contributed greatly to the increase in cumulative student debt. However, it’s important to remember that it also has resulted in more people with college degrees. And it’s resulted in more people with graduate degrees. While they may have higher balances, these are the people who will struggle the least finding employment and repaying their debts.