10.25.06 | Graduate School - how to pay?
Here is an article talking about the difficulties paying for graduate school. I think it wonderfully shows the need for the new Graduate PLUS loan that began this year. The PLUS loan has lower, fixed rates as compared to private loans with higher, variable rates. In the long run, they cand save graduate student thousands of dollars.
Graduate students seek loans as last resort for expenses
Wednesday, October 25, 2006
By Joe Smydo, Pittsburgh Post-Gazette
Lofton Durham has borrowed $20,000, worked during the summer and relied on his wife’s income to help make ends meet while doing his graduate work in the University of Pittsburgh’s theater department.
Yet he said the master’s and doctoral programs — six years of study in all — would have been unaffordable without the teaching fellowship and tuition waiver the department awarded him.
“My funding runs out in April ‘09, and that’s when I hope to be finished,” said Mr. Durham, 33.
Graduate and professional students have a fabled beg-borrow-or-steal existence. Mostly, worrisome research shows, they borrow. And most borrow more than Mr. Durham.
Because of the intensity of instruction and expensive lab work, graduate and professional programs cost more per year than undergraduate school.
Yet federal and state grant programs that assist undergraduates typically aren’t available to graduate students. Mom and dad may be tapped out after college, or unwilling to help finance the next leg of a child’s educational journey
The type of aid awarded to Mr. Durham is highly competitive and unavailable to most. Graduate and professional schools offer a limited number of assistantships, fellowships or work-study slots.
So, many of the nation’s growing number of graduate students take out multiple loans, perhaps accumulating more debt than they comfortably can handle. Alternatively, debt may dictate the course of a graduate’s career.
“One possible effect of the growth of debt is the declining number of new lawyers who enter government or public-interest jobs. Many of these jobs have starting wages of under $40,000 per year,” said the National Association of School Financial Aid Administrators based on a 2003 survey.
In another study, released this year, researcher Kenneth Redd reported that the cost of graduate and professional education climbed 65 percent from 1995-96 to 2003-04 at the same time the number of graduate and professional students grew by about 250,000.
Savvy students may hunt for special opportunities.
St. Vincent College offers alumni a 15 percent discount on graduate credits, financial aid director Thomas Ball said.
Some universities offer free graduate tuition to employees and their immediate families and have reciprocity agreements with other schools.
And some graduate students — more so in business and law programs than in medicine — go to school part-time so they can pay as they go.
Businesses may pay all or part of employees’ graduate tuition. Shari Payne, director of academic operations at Robert Morris University, said the school bills employers directly.
Still, loans accounted for more than 75 percent of the financial aid for graduate and professional students in 2002-03, the 2003 survey found. Doctoral students were not included.
On average, the study said, a person graduating from a master of arts or science program at a public university in 2003 had combined undergraduate and graduate debt of $24,809.
The so-called “cumulative debt” averaged $30,630 for MBA recipients at public schools, $54,025 for graduates of public law schools and $107,215 for graduates of private medical schools. Graduates of private dental schools had the highest cumulative debt, an average of $144,474, the study said.
Mr. Redd gave another snapshot of borrowing in his study, also for the financial aid administrators association. His study included doctoral students.
It found average cumulative debt of $27,702, $25,063 and $39,045, respectively, for master’s, MBA and doctoral-degree recipients at public schools; $51,230 for graduates of public law schools; and $108,844 for graduates of private medical schools. It did not give figures for dental schools.
Most loans come through the federal Stafford program, which offers $8,500 a year in subsidized loans. It also offers $10,000 a year in unsubsidized loans — the annual limit increases to $12,000 July 1 — to most graduate and professional students. Those in certain health fields are eligible for up to $36,700 of unsubsidized loans in a year.
The government pays interest on subsidized loans during a student’s enrollment; the student pays all interest on unsubsidized loans but may defer payment during enrollment.
The 2003 study found that many students — 16 percent of those at private business programs, 39 percent in private law schools, and lower percentages in other fields — also took out private loans likely to have higher interest rates.
Federal loans fall short of the cost of graduate education.
Researchers noted that “the annual federal student loan limits for graduate and professional programs accounted for only a fraction of the total cost of attendance.”
In 2002-03, a full-time student enrolled in a master of arts or science program at a public university paid an average of $17,207 in “total costs”– tuition, fees, books, supplies, transportation and living expenses, according to the study. It found the highest costs, an average of $56,370, for students at private dental schools.
“Free money” from schools, governments and private sources — whether grants, assistantships, scholarships or tuition waivers — represented 40 percent of the aid for master’s students in arts, science and education and as little as 11 percent in dental schools.
It represented 19 percent of aid for business students; 54 percent, theology; 17 percent, law; 11 percent, dental; and 24 percent, medical, according to the study.
Mr. Redd’s study found that full-time students were more likely than part-timers to receive fellowships, grants, assistantships and tuition waivers.
Undergraduate schools centrally process admissions applications and financial aid packages. In graduate school, those decisions often are made by individual departments and programs.
While various publications rank graduate programs, none offers a comprehensive guide to the free money at each school or the percentage who receive it, said Donald E. Heller, associate professor and senior research associate in Penn State University’s Center for the Study of Higher Education.
Dr. Heller and Patricia E. Beeson, the University of Pittsburgh’s vice provost for graduate studies, said prospective students should speak with faculty to make sure they’re a good fit for a program and assess the likelihood of aid.
Dr. Heller said his department generally admits only as many doctoral students as it can sponsor with assistantships or other help, and Mr. Durham said Pitt’s theater department seems more generous to students in doctoral and master of fine arts programs than students in the master of arts program.
Mr. Durham, who had no loans from his undergraduate days at Transylvania University in Lexington, Ky., said he was stunned by the potential borrowing for graduate work at some schools and recalled thinking, “This is a degree in theater, people. It’s not a law degree or medicine.”
An offer of substantial support from one school immediately can curtail a student’s search for a graduate program. That was the case for Mr. Durham and for Chelsea Oakland, an MBA student at Point Park University who receives a tuition waiver and stipend as a graduate assistant.
“How could you turn down a free education?” said Ms. Oakland, who has no loans from her undergraduate and graduate work at Point Park. Mr. Durham and Ms. Oakland enrolled in graduate school to improve their career options. He wants to teach at a university or be part of the artistic leadership at a large theater; she wants to work for a talent or casting agency.
“Our economy and society are very dependent on the training received by doctors, lawyers, engineers, teachers and other professionals,” Mr. Redd’s study said.
“Shortages of trained individuals in these areas could reduce our economic growth and have other severe consequences for our health and welfare. In addition, the financial barriers to graduate and professional education could have an enormous influence on the racial/ethnic composition of professionals in many fields.”
Conventional wisdom holds that a person risks financial hardship if he or she must use more than 10 percent of gross pay to repay student loans.
The financial aid administrators’ 2003 survey said that among those who left school in that year, average repayments ranged from 7.4 percent of starting salary for some master’s recipients to 16.3 percent for some law graduates.
For some, the alternative to borrowing may be to forego a graduate degree. Mr. Durham said he knew one master’s student in the theater department who had multiple jobs but no free money, and dropped out.
“It would have been a non-starter for me without the tuition waiver,” Mr. Durham said.