The Hidden Impact of Graduate School on the Student Loan Crisis

Heather Lowe had numerous adversities growing up – she didn’t want her kids to suffer likewise. Being in and out of foster care and witnessing her parents’ battle with addiction drove her to try to improve her situation. After becoming a mom at 19, she struggled to find stable housing and even stayed in a shelter due to domestic violence. Desperate to provide a better life for her children, Lowe embarked on a journey to pursue higher education. Despite earning multiple associate degrees and a bachelor’s in psychology, she realized that she needed a master’s degree. Lowe settled on the Master of Social Work (MSW) program and, after researching various options, she found the University of Southern California’s (USC) Suzanne Dworak-Peck School of Social Work. The program at USC resonated with her, and despite the expensive tuition, she chose to enroll.

The rising costs of college has been a hotly debated topic in today’s world, with politicians like Bernie Sanders and Tommy Tuberville stating that the increasing tuition fees are plunging young individuals into substantial debt. The ongoing conversation about student loan debt seems to focus on undergraduate degree programs and expensive elite universities. However, the truth is that most undergraduate students do not pay the full price. Many students receive financial grants and aid to offset the rising costs, making it still a good time to be a motivated undergraduate student. On the other hand, there has been a rapid rise in student loan debt for graduate degrees, which is mostly attributed to the removal of the cap on the amount of federal student loan debt allowed for graduate students in 2005. This, combined with a lack of market discipline, has led to a proliferation of expensive yet questionable graduate programs.

The introduction of Graduate PLUS loans opened the floodgates for graduate students to borrow unlimited amounts, leading to substantial increases in net graduate school prices. This vast availability of loans did not lead to better outcomes; instead, graduation rates remained unaffected. In contrast, the government has imposed caps on aggregate borrowing for dependent undergraduates. These stark differences in borrowing limits have contributed to the spiraling tuition costs for graduate programs, while net undergraduate prices have remained relatively stable. The availability of student loans is not the sole reason for rising tuition, but it has been a significant factor that has affected both graduate and undergraduate degrees.