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Report Finds a Big Slice of Student-Loan Debt Is Driven by Postgraduate Study

When families hear student-loan debt has reached $1 trillion, it—not surprisingly—causes them to pause before allowing their children to borrow for college.

Yet, a new report from the New America Foundation shows that 40 percent of student debt is being racked up by students pursuing graduate and professional degrees.

Borrowing for postgraduate work surged substantially between 2008 and 2012—and not just for those pursuing high-cost credentials in medicine or law. The Washington-based think tank finds that students earning a master of arts degree in 2004 took out an average of $38,000 in loans and by 2012 that amount, adjusted for inflation, increased to $59,000.

The author of the report, Jason Delilse, director of the New American Federal Education Project, writes that lumping together graduate and undergraduate debt distorts how Americans view issues of college costs and how policymakers should respond. Delilse suggests there are serious flaws in the way the federal government structures its aid program for graduate students and reforms are needed, particularly to income-based repayment plans.

Recent surveys show borrowing and college costs are a major concern in the college-selection process for families. The complicated financial-aid system leaves some students surprised about the amount of debt they accrue. Others don't understand the bottom-line price and aid available, particularly for disadvantaged students who aren't familiar with the system, leaving many undermatching—or not reaching for the best schools because of the high sticker price.

In its analysis, New America used data from the U.S. Department of Education's National Postsecondary Student Aid Study for students who completed graduate degrees in 2004, 2008 and 2012.

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