If you’re in a hole, it’s best to stop digging

WASHINGTON — It’s fitting the College Board released its trends in college pricing just before Halloween. It’s frightening what many families are paying to help children realize the American dream of a middle-income or better lifestyle.

The sticker price for tuition and fees at public four-year colleges and universities increased 4.8 percent to $8,655 over the last year. Prices increased 4.2 percent to $29,056 at private nonprofit fouryear schools. That’s not including room and board.

One chilling fact in the report often gets overlooked because there is so much focus on cost of an undergraduate education.

In 2011-12, federal loans amounted to 67 percent of the $51.7 billion in student aid received by graduate students, the College Board reported. This means that graduate students — those enrolled in master’s or doctoral programs and those in fields such as law and medicine — are much more dependent on student loans.

Federal loans constituted 38 percent of the $185.1 billion in student aid received by undergraduate students, the College Board said.

And those graduate students taking out new loans from the federal government won’t be getting the same subsidized help they’ve have had access to in the past. The change is part of the federal govern- ment’s efforts to cut costs and reduce the deficit.

Students get a better loan deal under federal student loan programs. Federal Stafford loans are either unsubsidized or subsidized. In the case of a subsidized Stafford loan — awarded based on financial need — the federal government pays the interest while the student is enrolled in school. With an unsubsidized loan, the student is responsible for the interest payments, which begin to accrue immediately, unless the borrower decides to defer these interest payments until after graduation.

New federal Stafford loans taken out by graduate students as of July 1 will all be unsubsidized. Graduate students can borrow $20,500 per academic year. Unless you make interest payments while you’re in school, the federal loans will accrue interest at a fixed rate of 6.8 percent.

“While many graduate students, particularly those in the sciences and engineering, complete graduate school with little or no debt, the data indicate that a growing number of graduate students are not that fortunate,” says a report by the Council of Graduate Schools. “The increased reliance on student loans to finance graduate education, combined with the elimination of subsidized Stafford loans for graduate students, increases in tuition and fees, and decreasing or stagnant support for higher education in many states suggest that debt levels will continue to rise. Many graduates are already entering the workforce saddled with debt that exceeds their an- nual salaries, and without changes to existing financial aid policies, more graduates will be in this position.”

In its report, the council recommended that the federal government, state governments, universities and businesses work together to help students earn advanced degrees without incurring massive debt. For example, the organization has recommended a tax break that would encourage employer-provided assistance for graduate studies.

Until there are policy changes, if you’re a recent college graduate with a lot of undergraduate loans and no good job prospects, the default move shouldn’t be, “I’ll just go to graduate school.”

Think of the expression, “When you are in a hole, stop digging.” Don’t accumulate more loans. Investigate first whether a graduate degree in your field of study and in the job market is worth the debt load you’ll amass.

If you’re working, save up the cash for graduate school. Yes, I’m aware this will take time. But take the time unless you are prepared to burden yourself with decades of debt. Or look for an employer who will fully fund your graduate education or subsidize some of your studies.

In the current job market and economy, an undergraduate degree is often not enough education for many fields. I get this. But I also know from the numerous emails and conversations I have with people that a graduate degree doesn’t always produce a big enough increase in salary to offset the scary debt many graduate students take on.