The liberal arts doctorate leaves borrowers with nearly $ 200,000 in student loan debt on salaries of $ 40,000, a study found
Budding engineers, doctors, and lawyers must earn an advanced post-secondary degree, which can cost hundreds of thousands of dollars. While taking on student loan debt you can pay off in the form of a higher income, That’s not always like that.
A doctorate in the humanities has the lowest payoff potential, according to a new study carried out by Dr. Andrew Gillen, an economist with the Texas Public Policy Foundation. These graduates are tasked with paying off nearly $ 200,000 worth of student loans on a salary of just $ 40,000.
Dr. Gillen compiled data from the Ministry of Education to estimate how many federal student loan graduates have amassed based on their subject of study. Unsurprisingly, some of the largest post-secondary graduate debt balances are in medical fields such as dentistry ($ 138,857), medicine ($ 179,553)) and optometry ($ 178,870).
But among the programs that almost guarantee a well-paying career, some other advanced degrees came at a surprisingly high price: Alternative Medicine ($ 230,103), Dispute Resolution ($ 135,844).) and liberal arts ($ 199,115), for example.
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While a college degree can open doors to more advanced areas, it is important for students to understand the implications of taking on high student loan debt. Remove six figure debt studying in a relatively poorly paid area can be “disastrous” for graduates, added Dr. Gillen added.
If you are struggling to pay off large college debt, consider your student loan repayment options such as refinancing a private student loan. You can Compare student loan refinancing rates without affecting your creditworthiness with Credible.
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What is the average student loan debt?
The average student loan debt per borrower depends on the type of degree. The average amount of debt students take on for a bachelor’s degree is $ 23,000 compared to $ 144,000 for a professional degree.
The total cost of student debt also depends on the academic field. The most expensive course is a PhD in Pharmaceutical Sciences, which leaves graduates with $ 271,378 in federal student loan debt. However, with an average salary of $ 119,806, this career path is more likely to pay off.
In contrast, a master’s degree in accounting on a salary of $ 60,311 leaves the student in debt of $ 28,341. A bachelor’s degree in computer science costs just $ 17,052 but pays off quickly with an average salary of $ 69,338.
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Dr. Gillen said one of the study’s key findings is the high levels of debt borrowers are taking out degrees.
“At the undergraduate level, we have limits on how many students can take in, but what they have done is, for the most part, limited over-indebtedness at the undergraduate level,” he said. “At the graduate level, over-indebtedness is really worrying.”
The state loan limits for students are $ 31,000 for dependent students and $ 57,500 for independent students. but PLUS loans for PhD students don’t have the same credit limits, making it easier to get over-indebted when acquiring a post-secondary degree. Plus, PLUS loans have the highest interest rate of all federal loans at 6.28%.
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How to Reduce Student Loan Debt
Spending on student loans can be costly on your budget and prevent you from reaching financial milestones like saving for retirement and buy a house. However, there are ways to pay off your student loan debt faster and even save money in the process. Here are some steps to consider.
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Refinancing at low interest rates
When refinancing the student loan, you take out a new student loan with better conditions to repay your current loan. Qualifying for a lower student loan interest rate can help reduce your monthly payments, are debt free faster and save money over the loan term.
With student loan refinancing rates near all-time lows, now is a good time to start refinancing your student loan debt. Well-qualified borrowers who refinanced themselves with Credible for a shorter loan period were able to pay off their debt years faster and Save nearly $ 17,000 over time.
If you have government student loans, keep that in mind Refinancing to a private lender means you lose federal benefits like COVID-19 deferral, income-oriented repayment plans, and student loan allocation programs.
You can Learn more about student loan refinancing and compare the interest rates on Credible.
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Sign up for automatic payments
Setting up a direct deposit for your student loans ensures you won’t miss a single payment, but there is an added benefit of signing up for automatic payments. Many lenders offer an Autopay discount in the form of a lower interest rate that can help you save even more money while you pay off your debt.
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Pay more than the minimum to reduce interest costs
Paying your student loan is the minimum you owe, but you can save thousands and pay off your debt faster if you can afford to make more than the minimum payment. Use Credible’s loan calculator to see how you can save money by repaying your loans faster during the life of the loan.
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