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Americans owe more in student loan debt than credit card debt. And a large share of the country's $1.5 trillion in student loan debt is graduate school debt. It's continuing to rise more than undergraduate debt. Sally Herships and Cardiff Garcia from NPR's economic podcast The Indicator From Planet Money looked at why schools are relying on graduate students taking out more loans.
CARDIFF GARCIA, BYLINE: According to the College Board, the total amount borrowed by grad students has been climbing. Back in 2002, only 32% of the dollar value of government loans went to grad students. But during the last academic year, that number was up to 40%.
JON MARCUS: Even though we spend a lot of time talking about undergraduate debt, it's essentially been flat for a few years. What's going up is graduate debt.
GARCIA: That's Jon Marcus. He's the higher education editor of The Hechinger Report. And he says that the cost of graduate school is rising faster than the cost of undergraduate education.
SALLY HERSHIPS, BYLINE: There are a host of reasons graduate students are taking on a larger chunk of our student debt bill. Reason No. 1 - undergrad enrollment is weak. There's been a dip in the birthrate, so fewer students. And as the economy has improved, after high school, a lot of people are going right into the workforce and skipping college. So schools are under enormous pressure to get butts in chairs.
MARCUS: One of the university presidents I spoke to about this was at a university in Florida, a Catholic university, that's increased its graduate enrollment by 30% in the last few years. And the president said if there is no margin, there is no mission.
GARCIA: Meaning this particular school in Florida is using revenue from graduate students to subsidize its undergrad programs. Moving on to the next reason, reason No. 2, that grad students are taking on more debt - if you are a grad student trying to take out a loan from the government, you are not going to get the same deal as an undergraduate student.
MARCUS: Federally subsidized student loans for graduate students have higher interest rates than federally subsidized loans for undergraduates.
GARCIA: Plus, Marcus says there are fewer limits to how much money graduate students can borrow. So this means that graduate students are going to be able to take out more debt than undergraduate students. And also because those interest rates are higher, then if graduate students aren't paying off all their interest on time, then their debt can really add up.
HERSHIPS: And don't forget - grad students are often older, so they may be taking care of kids and rent.
GARCIA: And that tuition can be high. It generally costs a lot more than undergrad tuition.
HERSHIPS: Although some grad degrees come with the promise of big, fat salaries, some of them do not.
MARCUS: I don't think it would come as a surprise to anyone that social workers don't make a whole lot of money.
GARCIA: And this is where we get to the impact that the rising amount of graduate student debt can have on the economy. Marcus says students looking for advanced degrees could turn away from lower paying sectors, like the nonprofit sector, once they've done the math, once they've compared the cost of taking on all that debt versus the potential for what they can make at their jobs in the future.
There could be another problem. There is a risk of taking this too far because if graduate programs are supposed to subsidize undergraduate programs, then what happens if graduate school enrollment also starts to weaken? And that could happen if the cost of graduate school goes up by too much. And we might, in fact, already be seeing signs of this. For example, law school enrollment is down 29% since 2010.
HERSHIPS: Sally Herships.
GARCIA: Cardiff Garcia, NPR News.
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