Federal loans for graduate students on track to outpace those for undergraduates

Higher Ed Dive

Natalie Schwartz

August 17, 2023

Dive Brief: 

• The U.S. Department of Education could soon disburse more for graduate student loans than it does for undergraduate loans, according to a recent report from the agency’s chief economist office.

• That’s because undergraduate loan disbursements have plummeted, falling from almost $80 billion in 2010 to $45 billion a decade later. Those figures are adjusted for inflation to 2020 dollars.

• Meanwhile, graduate loan disbursements surged starting around 2000 before leveling off at around $40 billion from 2010 to 2020. Graduate loans will account for the majority of disbursements in the next few years if these trends persist, according to the report.

Dive Insight: 

The August report offers insight into how the federal student loan landscape is shifting and what’s fueling those changes. More adults heading to graduate school is one big driver.

The share of adults ages 25-54 with a graduate degree has doubled over the past 20 years, according to the report. Much of the increase came from master’s degree attainment — the share of adults with that diploma rose from 6% in 2000 to 12% in 2022.

However, degrees awarded tell only part of the story. Not only have more students pursued graduate studies, but borrowing amounts for these programs have also increased when inflation-adjusted to 2020 dollars.

In 2000, borrowers who completed their degrees took out an average $53,140 for their graduate programs. By 2016, that amount rose to $66,502. And the share of borrowers taking out loans for high-priced programs has also jumped.

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