Bad news for everyone who hoped to sit the recession out in a cushy grad school program: A provision of the new debt ceiling deal will save money by eliminating special loan conditions for grad students.
Used to be that grad students could get a special kind of loan that didn’t charge any interest until six months after graduation. It kept debt from ballooning while folks were still in school, and sweetened the grad school deal for some. But not any longer — and with the demise of the special loan, students will be paying an extra $21.6 billion over the next 10 years — or, to put it in individual terms, as much as a few thousand dollars for an individual student.
Which is depressing, if you’re a grad student or know some grad students. And, odds are, you probably do — this deal comes at a time when more Americans than ever are going to grad school. The master’s is the nation’s fastest growing degree, with the number awarded more than doubling since the 1980s. According to the New York Times, 2 in 25 people over age 25 have a master’s — about the same proportion as had a bachelor’s in 1960.
And students are also in more debt than ever, a condition that’s not likely to improve if the job market continues its recent miserable trend. More than half of today’s master’s students end up borrowing an average of $31,000 — and that’s on top of any undergrad debt. Want a PhD? You’ll probably be paying off your loans until your kids are in college.
Lawmakers agreed to the cuts in part because the savings mostly went to fund the Pell Grant program, which helps poor students go to college. A worthy cause, to be sure — and one that could have stood to lose a ton of money. Let’s just hope those Pell Grant recipients are smart enough not to go on to grad school.