Grad School Debt and Financial Aid Plans

February 17, 2012
Steve Simmons

Here’s a Quantitative Comparison question for you – which Quantity is greater?

Quantity A) Debt for all Post-secondary students


Quantity B) Debt for the entirety of all American consumers


The answer is: Quantity A) Debt for all Post-secondary students.

Astounding though it might seem, according to and, the latest figures show that student debt weighs in at $850 billion and was expected to surpass $1 trillion by the end of 2011. The Federal Reserve reports that consumers currently owe $828 billion in credit card debt.

How is this possible?  Well, as our President explained in a speech in Denver back in October, “Over the past three decades, the cost  of college has nearly tripled, and that is forcing you, forcing students, to take out more loans and rack up more debt.”  Obama offered up those words as he was introducing his new “Pay as You Earn” plan. This plan is aimed at decreasing the burden of student debt on students who struggle to meet the obligations of repaying their federal college loans.  According to a White House press release, the plan proposes to cut students some slack by capping their required monthly payment at 10 percent of the borrower’s discretionary income while also taking family size into account.  Given the current high unemployment rates, many students could benefit from the program.

The plan would also allow borrowers to transfer all Federal Family Education Loans (the private loans taken before July 1st, 2010) into the current Direct Loan plan, thus giving borrowers just one payment per month and reducing their interest rate by half of one percent.

Almost all current grad school students and most undergraduate students took out student loans under the old, bank-involved system and, as such, would be advised to transfer their old loans to the new Direct Loan plan if and when the program passes legislation.

Politicians are split on whether or not the Obama plan would help the overall economy. I suspect that many students would appreciate the relief they’d feel with fewer concerns about debt while they focus on their education. As someone who may be grappling with both undergraduate and potential graduate school debt, what are your thoughts on this topic?

If you are interested in learning more about financing your graduate school education, please visit visit our YouTube channel and our Grad School Financial Aid Hub.


Steve Simmons Steve Simmons has been teaching for Kaplan for over 8 years. Having successfully held management positions in the reams of Kaplan business operations and academics, Steve brings a unique perspective to the world of test preparation. He teaches lots of GRE courses while also working in content development and revision. Assisting students in reaching their dreams compels Steve’s energy and love of career! Although Steve enjoys playing guitar and singing in a local dive bar band, he also is the father of two school-aged sons and his favorite activity is parenting them and helping with their development into intelligent, caring, interesting young men (whilst avoiding screwing them up entirely). Steve attended Michigan State University and Western Michigan University, earning degrees in Business Administration and Education.

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