Hironao Okahana, Associate Vice President, Research & Policy Analysis, Council of Graduate Schools

The latest national data suggest that increasingly more former Pell recipients—thus, students from low-income backgrounds—are pursuing graduate and professional programs. However, the data also suggest that many of them begin their advanced education with sizeable undergraduate debt and continue to rely on student loans to finance their education. Graduate schools should proactively help these students make informed financial aid decisions and manage and reduce their borrowing and debt.

Introduction

The sociodemographic diversity of the graduate student body has evolved over time. Though still disproportionally underrepresented, we reported in the CGS/GRE Survey of Graduate Enrollment & Degrees that first-time enrollment of traditionally underserved students of color continues to grow. Graduate schools continue to make efforts to ensure a more diverse and inclusive student body through a number of initiatives. Another indicator of sociodemographic diversity in higher education is the Pell ratio, that is, the proportion of the student body who receives Pell Grants. This indicator is commonly used to assess sociodemographic diversity of undergraduates since the Pell Grant has income requirements and is specifically targeted to low-income students. Because graduate students are not eligible for Pell Grants, typically we do not closely observe this figure. Nevertheless, looking at proportions of former Pell recipients among graduate students can offer additional insight into the accessibility of graduate education for those from low-income backgrounds.

In May 2018, the National Center for Education Statistics (NCES) released the PowerStats version of the 2015-16 National Postsecondary Student Aid Study (NPSAS:16). PowerStats is an online tool that allows researchers to generate data tables and some analyses using various NCES sample surveys, including NPSAS. NPSAS is a nationally representative sample study of financial support for all students at U.S. institutions of higher education. NCES conducts this study every three to four years, and the most recent one, NPSAS:16, captures one of the most comprehensive looks at how undergraduate and graduate students were financially supported during the Academic Year 2015-16. As points of comparison, I also looked at two earlier cohorts: NPSAS:08 and NPSAS:12, which respectively offer snapshots of students in Academic Years 2007-08 and 2011-12.

More Former Pell Recipients at Graduate and Professional Schools

Table 1 summarizes the percentage shares of former Pell recipients among first-year graduate and professional students by selected degree programs. According to NPSAS:16, 45.8% of first-year graduate and professional students received Pell Grants at some point. This is an increase from a little under one-third (32.5%) for the NPSAS:08 cohort and 35.9% for the NPSAS:12 cohort. In all types of graduate and professional programs, the shares for former Pell recipients among first-year students increased when compared to NPSAS:08 and NPSAS:16 cohorts. The shares of former Pell recipients among first-year students in the NPSAS:16 cohort were particularly high in master of public administration or policy (64.2%), master of social work (63.3%), and master of education or teaching (54.5%) programs. Of the first-year students in doctor of philosophy and doctoral degree – professional practice (e.g., MD, JD, DDS, etc.) programs, 41.7% and 39.8%, respectively, were former Pell recipients in the NPSAS:16 cohort. These changes are encouraging signs that the increasing number of students from low-income backgrounds are moving beyond baccalaureate education and pursuing graduate and professional degrees.

Former Pell Recipients Are More Likely to Take out Student Loans

However, the data, which are summarized in Table 2, also suggest that these former Pell recipients among first-year graduate and professional students come with greater financial needs for their advanced education than their counterparts. Among the first-year students in the NPSAS:16 cohort enrolled in various graduate and professional programs, 69.7% of former Pell recipients took out student loans during the 2015-16 academic year. 37.6% of students who never received Pell Grant borrowed toward their advanced education in the same year. The discrepancy was the largest for first-year students in Master of Arts (MA) degree programs. Nearly three-fourths (73%) of former Pell recipients among those MA students took out student loans during the 2015-16 academic year, while only 29.3% of non-former Pell recipients did the same. The median amount borrowed by former Pell recipients who were first-year students in MA degree programs was $18,444, while the median amount borrowed by their counterparts without Pell Grant debt was $13,195. The difference in amount borrowed between former Pell recipients and non-recipients was the smallest among first-year students in doctoral degree – professional practice (e.g., MD, JD, DDS, etc.) programs. Among those who were pursuing doctoral degrees – professional practice, the median amount borrowed by former Pell recipients was $39,106 while the median amount borrowed by non-former Pell recipients was $35,000.

Bigger “Baggage” of Former Pell Recipients

Even before borrowing for their advanced education, as summarized in Table 3, these former Pell recipients arrive at graduate and professional schools with larger amounts of undergraduate debt. More than three quarters (77.2%) of first-year master’s students who formerly received Pell Grants carried outstanding balances from their undergraduate loans, with the median amount of $28,131. This is compared to only 31.2% of their counterparts who never received Pell Grants carrying outstanding balances for their undergraduate debt. Furthermore, the median amount still owed for the latter group was substantially smaller at $18,964. Median amounts still owed on undergraduate debts exceeded $30,000 for first-year students in master of social work ($33,658), master of business administration ($33,352), master of arts ($31,584), and doctor of philosophy ($30,228) programs. Students can defer repayment of their federal student loans while pursuing advanced degrees; however, unsubsidized portions of loans still accrue interest during deferment. The debts former Pell recipients carry over from their undergraduate education, compounded by potential unmet financial needs toward their graduate and professional education, could prevent them from fully realizing the upward social mobility often associated with attaining advanced degrees.

Discussion

An increasing number of former Pell recipients entering graduate and professional programs is a welcome sign. However, it is clear many of these students arrive to graduate school with sizeable undergraduate debt. At the federal-level, the vast majority of financial aid for graduate and professional students comes in the form of loans. Absent federal need-based grants for graduate and professional students that mirror the Pell Grant program for undergraduates, it is no surprise that former Pell recipients are more likely to borrow for their advanced education. Simply limiting the ability of graduate and professional students to borrow would take away one of few aid options for students with the most financial need. What we should encourage, instead, is more informed decisions.

Graduate students need to be aware of how their undergraduate and graduate debts interact with one another, and how to manage both while in school and upon completing their degrees. Thus, CGS advocates at the federal-level for establishing procedures that support master’s and doctoral students in making informed financial aid decisions to reduce their borrowing and debt. Graduate schools, too, can play a role in preparing students to actively manage their personal finances and make informed decisions about saving, spending, and borrowing.

However, debt management alone can only go so far in ensuring access and affordability of graduate education for students from low-income backgrounds. Thus, CGS advocates for extending Pell eligibility to those graduate students who remain income eligible and did not exhaust 12 semesters of Pell while pursuing their undergraduate education. In the NPSAS:16 cohort, only 6.5% of domestic graduate students have received Pell Grants for six years or more. What we advocate would allow the 34.6% who did not use all 12 semesters of Pell Grants to apply their remaining semesters toward their graduate education, as long as they also remain income eligible. This is one way to alleviate their borrowing toward graduate education, thus reducing overall education debts.