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One interesting fact is that while enrollment in graduate schools is going down, applications are going up. As of 2012 (the last year for which this information is available) there was about a 1.7% drop in graduate school enrollment for first-time students but a 4.3% increase in graduate school applicants. Why is this? Several reasons have been cited. For one thing, public funding is dropping in the educational area. For another thing, with fewer schools offering funding for students it would appear that those that got accepted chose to not enroll because they didn’t receive any funding. Also, student loan debt has grown to the point where many students could decide not to go to grad school and run up their student debts even further. On the other hand, students with no student loan debt are more likely to go to grad school.
Employers like people with graduate degrees
While graduate school enrollment may be dropping, many employers still favor those that have graduate degrees. There are two reasons for this. First, these people will have specialized knowledge and skills. Second they completed a degree, which shows they are motivated and dedicated individuals.
An average of $60,000
If you decide to go to graduate school be prepared for a bit of sticker shock. It will probably cost you around $60,000 to get a Masters degree. In fact, this is the average amount of money students borrow to get a Master’s degree. When you finish your graduate program and your grace period ends, you may find that you’re repaying bigger and more complicated loans than you did as an undergraduate.
Different repayment options
The good news of ending up with more debt is that you could take advantage of more repayment options. As an undergraduate you could have borrowed as much as $31,000 in unsubsidized and subsidized loans. However, as a graduate you can borrow up to the full amount of whatever it costs to attend the school of your choice. As an undergraduate the Standard 10-year Repayment program might have been good enough for you. But if you end up with $50,000 or more in student loans you could choose a different repayment program. There is Graduated Repayment, Extended Repayment and three Income-driven repayment plans. One of the most popular of the income-driven plans is Pay As You Earn. If you can qualify for this program your monthly payments would be capped at 10% of your discretionary income and you could earn debt forgiveness after 20 years – assuming you make all your payments on time.
They’ll have different terms
When you were an undergrad you might have gotten subsidized federal student loans. This means you were not required to pay interest on them so long as you were in school. But if you go to grad school you can’t get subsidized loans. Plus, the interest rates on unsubsidized loans are higher. In fact, as of this writing they are 6.21% for graduates versus 4.66% for undergrads. There are also PLUS loans for graduate students that have a 7.21% interest rate.
Check it out before you leap
Before you rack up more student loan debts to go to graduate school it’s a good idea to know how much money you owe at this point. If you have multiple loans at different interest rates and different types you need to go to the National Student Loan Data System For Students website to see how much you’ve borrowed and what you owe. Add this amount to the $50,000 or $60,000 you may need to borrow to pay for grad school and you’ll at least how far you’ll be in hock.
You’re not guaranteed a six-month grace period
If you get a Graduate PLUS loan you will not have the same grace period you did when you finished your undergraduate studies. However, you would be eligible for a deferment option post-enrollment, which is roughly the same as a grace period as it would delay your repayment by six months. But here’s an area where you need to be careful. If you used your grace period after you graduated you’re stuck. There is no such thing as a second grace period on undergraduate loans. So you would need to resume repayment immediately after grad school unless you get forbearance.
The big question – should you even go to graduate school?
Too many people have gone to graduate school just because they felt they needed to or, in some cases, because they couldn’t find a job in their field of study. Others believed that getting a Masters degree would help them get a job. However, experts say that none of these are really good reasons to go to graduate school and they can actually make getting a job more difficult and not easier.
Don’t go if you don’t know
If you don’t know what you are going to do with a graduate degree, you probably shouldn’t go to grad school. And you definitely shouldn’t go to graduate school because you think it would make it easier for you to get a job. In fact, this can actually harm your ability to get the job of your choice.
Does this sound counterintuitive? Not if you think of it this way. First, if you plan on a career that doesn’t really require a graduate degree, your prospective employers may think you don’t really want the job as you didn’t go to school for it. They’ll believe that you will leave the minute you find a job in your field of study’
Second, you won’t receive any full-time work experience while you’re in school. When you finish your graduate program, your peers that have been working for a year or two and will be more experienced and better positioned than you.
As noted above, you’re likely to rack up a large amount of student loan debt. This could limit your prospects, as you may feel forced to get a job you don’t really want but that pays more so you can pay back those loans.
Does it truly require a graduate degree?
The best question to ask yourself before you sign up for that graduate program is if the job you want truly requires a graduate degree. If you’re not sure this is true, talk with people who do the kind of work you want to do. Ask them how useful it would be to have a graduate degree. It’s possible they will tell you that the job won’t deliver the payoff you’re looking for and that experience is more valuable. On the other hand, you might learn that it will really help to have a graduate degree. If this is the case you should move on to the next questions such as are there certain graduate programs or schools that will help me the most? You should also ask if there are some programs that will not be of any help at all. Could you enroll in a cheaper program that would still offer the benefits you need? You need to get answers to questions like these before you sign up for grad school.
An internship could be better
If you learn that a graduate degree would not help you in your career, there are much cheaper and less time-consuming ways to figure out what you want to do for a living such as an internship, networking or just trying out jobs that sound interesting. You shouldn’t treat grad school as a way to determine what you want to do in life. If so, it could be a very expensive and long career counseling session where it would be better to get out and start working. Then if you find that you’re pursuing a career path that requires more schooling, go get your Masters degree then.
