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Many of the frightening stories you hear about millennials taking on staggering amounts of student loan debt — $50,000, $100,000, or more — are actually about graduate student loans.

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  1. Graduate student loan debt by degree type
  2. Average time to complete grad school
  3. Grad school debt and earning potential
  4. Total grad school debt
  5. Interest rates on graduate student loans
  6. PLUS loans for law school or medical school

Graduate students represent just 14% of students enrolled at colleges and universities, but take out 40% of all federal student loans.

On average, among grad students who borrow:

  • Total student debt: $70,000
  • Total student debt law or medical school students have at graduation: $159,000

Although many graduate students take on what seems like frightening amounts of debt, the degrees they earn typically provide an earnings boost that makes repaying their loans manageable. In fact, it’s borrowers who take out relatively small amounts of student loan debt, but fail to complete their degree, who are the most likely to default on their loans.

So graduate students need to weigh the amount of debt they’re willing to take on against what they can expect to earn with their degree.

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Graduate student loan debt by degree type

The amount of debt that graduate school students take on is determined not only by their personal finances, but the cost of attendance at their chosen school, and the type of degree they’re pursuing. But there are some loan limits on federal loans for grad students. Depending on the type of loan and degree, graduate students can borrow up to:

  • Federal direct loans: $138,500
  • Federal direct loans for medical, dental, or veterinary students: $224,000
  • Federal PLUS loans: School’s cost of attendance

According to an analysis of the latest data from the Department of Education’s National Postsecondary Student Aid Study (NPSAS) by the think tank New America, here’s the average debt at graduation for students who borrowed to earn the following degrees:

  • Master’s degree: $56,049
  • Doctorate in a research or scholarly field: $82,846
  • Doctorate in a professional field like law or medicine: $159,000

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Average time to complete grad school

Why do students pursuing professional degrees rack up nearly twice as much debt as those earning research doctorates, and close to three times as much as those earning master’s degrees?

For one thing, a master’s degree usually requires only one to two years of full-time academic study. Some students also hold down a job while pursuing degrees like a master’s in business administration (MBA).

Students who enroll in law school full-time are expected to graduate in three years, while medical school takes four years — plus an additional three to seven years as a supervised (and relatively low-paid) “resident” doctor.

A research or scholarly doctoral degree program is typically designed to be completed in four to six years, but often takes longer. Students take an average of 7.3 years after starting graduate school to earn their doctorate, and there’s considerable variation by field:

  • Physical and earth sciences: 6.1 years
  • Engineering: 6.5 years
  • Life sciences: 6.7 years
  • Math and computer sciences: 6.9 years
  • Psychology and social sciences: 7.9 years
  • Humanities and arts: 9.3 years
  • Education: 11.7 years

Even though they may take longer than professional students to earn their degrees, students pursuing research and scholarly doctorates often have opportunities to work as research or teaching assistants, reducing their costs and need to borrow.

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Grad school debt and earning potential

As shown below, most students earning master’s degrees and research doctorates borrow less than $50,000 for grad school. But half of students earning professional degrees in fields like law and medicine borrow more than $100,000, and one in five students earning a professional degree takes out more than $200,000 in loans.

Although professional degrees often lead to higher levels of student loan debt, they can also lead to higher earnings that can add up over the course of a lifetime.

As the chart below demonstrates, a master’s degree provides a 26% boost in average salary compared to a bachelor’s degree. But workers with professional degrees earn about twice what their colleagues with a bachelor’s degree do, on average.

Among borrowers investigating refinancing their student loan debt, we’ve found that holders of advanced degrees in finance and public policy have more manageable levels of debt than doctors, lawyers, and pharmacists. Dentists, optometrists, and veterinarians are more likely to take on challenging levels of debt.

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Total grad school debt

Although they represent only 14% of students enrolled in colleges and universities, grad students take out about 40% of student loans — $37.6 billion in 2017-2018, according to the College Board.

Even after you adjust for inflation, that’s still almost twice as much borrowing as was taking place around the turn of the century.

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Interest rates on graduate student loans

Another cause for concern is that grad students pay considerably higher interest rates on federal student loans than undergraduates.

There are three interest rate tiers for federal student loans. Students taking out loans for the 2018-2019 academic year will pay the following rates:

  • Subsidized and unsubsidized direct loans (undergrads): 5.05%
  • Unsubsidized direct loans (grad students): 6.6%
  • PLUS loans (grad students and parents of undergrads): 7.6%

Since 2013, rates for new federal student loan borrowers have been calibrated to 10-year Treasurys. As the chart below shows, rates have gone up for two years in a row.

Once you take out federal student loans, the rate is set for life. But the 1.29 percentage point increase in rates for new borrowers over the last two years translates into nearly $7,000 in extra interest payments for a borrower graduating with $86,000 in undergraduate, graduate and PLUS loans and repaying that debt on the standard 10-year plan.

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PLUS loans for law school or medical school

Because they are the most likely to hit the limits on Stafford loans, students seeking professional degrees in fields like law and medicine are also the most likely to resort to taking out high-interest PLUS loans. The most recent stats available, from the 2015-2016 academic year, reveal the percentage of students who borrowed by degree type:

  • Master’s degree: 44% took out loans, but only 6% took out PLUS loans
  • Research or scholarly doctorate: 31% borrowed, but only 6% relied on PLUS loans
  • Doctorate in a professional field like law or medicine: 72% borrowed, but 42% took out PLUS loans

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Taking on extreme student loan debt

The chart below reveals that:

  • 3 out of 4 borrowers owe $40,000 or less
  • 2.7 million borrowers owe more than $100,000
  • This relatively small group of 2.7 million borrowers owe $470 billion (about one-third of all outstanding federal student loan debt)

When students take on extreme amounts of debt, they often need to stretch their payments out over much longer than the standard 10-year repayment plan to make their monthly payments more affordable. The chart below shows the cost of repaying $200,000 in student loan debt in any of seven commonly use government repayment plans and compares those plans to refinancing into a private loan at a lower interest rate.

The calculations assume that the borrower starts repayment with $138,500 in unsubsidized federal direct loans for graduate students at 6.38% and $61,500 in PLUS loans at 7.44% (those are average rates for each type of federal student loan issued from 2006 to 2018).

Although income-driven plans like PAYE and REPAYE can lead to loan forgiveness, the amount forgiven is currently considered taxable income by the IRS (forgiveness granted through the Public Service Loan Forgiveness program is not taxed).

For high-earning graduate degree holders who can afford the monthly payments, refinancing into a loan with a shorter repayment term can be the quickest way to dispatch debt with the least amount of interest paid.

To help you get a better grasp of the numbers, we’ve provided the sources for all the statistics we cite to help anyone from journalists to students.

All of the charts in this article are free for you to share or embed on your own website, blog, or research paper.

Check out the other articles in this series, which look at the average time to pay off student loans, average student loan debt, average cost of college, and student loan default rates.

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