Graduate Student Debt

Posted on Thursday, August 9th, 2012 by admin under Student support, Students. Tags: , , , , , , , ,

post by Dean Bill Wiener

These days there has been much concern in the media over the cost of college and the rising debt that is being accrued by students.  In the past it has been the axiom that going into debt for a college degree is good debt because it is an investment in one’s future.  Previous studies have shown that those who have a college degree earn more than those without such a degree.  Often it has shown to be a premium of 60 to 84 %.  The studies have also suggested that the unemployment rate for those with a college degree is far lower than for those without such a degree.  This has been the common wisdom up until now.

Currently we see the media asking the question:  Is the college degree really worth the debt that it requires?  The question is being asked because the amount of average debt is growing and yet unemployment following our great recession is still unacceptably high for everyone including those with a college degree.  Today many young people are facing the question of whether or not to go into debt on the basis that it is a good investment in the future.

A recent (8/9/12) analysis from an economist at the Federal Reserve Bank of Cleveland on “The College Wage Premium has shed new light on this pressing issue: http://www.clevelandfed.org/research/commentary/2012/2012-10.cfm.  The article points out that the current analyses of the economic returns of college usually focus on all “college degree” holders without separating graduate degrees from bachelor’s degrees. The financial advantage of a bachelor’s degree over those with some college or those with a high school diploma is documented, but the premium for a bachelor’s degree has not been growing at the same rate that it had in prior decades.  However, the article goes on to say that when we separate out those with graduate or advanced degrees from the mix we find that those with advanced degrees have accounted for most of the growth in wages.  The exact quote from the article states “Even excluding advanced degree holders, the premium for a four-year degree alone remains extremely high at about 60 percent. Interestingly, once the growth in wages for advanced degree holders is removed, the four-year degree premium has remained flat over the past decade. In other words, it is the growth in the value of advanced degrees that has accounted for all of the growth in the classical measure of the college wage premium since the 2000s.”

From this we can conclude that even during these troubled economic times the attainment of a master’s or doctoral degree provides increased value and is a good investment.  However, even with that being said, graduate students of today must be careful not to take out too much debt.  It is important to examine the potential earnings in one’s discipline and plan accordingly.  A student should break down the expected earnings into the various categories of living expenses that will be needed following graduation. From the amount that remains the graduate will have to consider recreation needs, savings, and of course student debt repayment.  The Graduate School would like to help UNCG students complete such an analysis and will be offering a seminar this fall that will focus on managing graduate student debt.  Please watch for the announcement of this seminar in the fall.

Dean Wiener