Congress Might Do Away With Grad PLUS: Killing the Colleges' Cash-Cow Graduate Programs

 The U.S. House of Representatives passed President Trump's Big Beautiful Bill,  but it was tweaked a bit in the Senate. A final bill will be crafted through the reconciliation process, but it seems inevitable that Congress will scuttle Grad PLUS, an unsubsidized federal loan program with no borrowing limit.

The Senate version of the Big, Beautiful Bill caps federal loans for professional degrees (primarily law and medicine) at $200,000 and other graduate degrees at $100,000. This is a student-loan reform that is long overdue.

Once the colleges realized that there was no borrowing limit on grad-school loans, they jacked up graduate-school tuition rates and rolled out new graduate programs to lure in more suckers. MBA programs popped up like crabgrass on the campus quad, and mediocre MBA programs were often as expensive as the prestigious programs offered by Harvard and other elite schools.

Of course, the universities deny the charge that they raised tuition prices to take advantage of limitless student borrowing, but that's academic bullshit. The universities have never accepted the responsibility of keeping their costs down.

Sandy Baum, a nationally recognized student loan scholar, acknowledged that there is evidence that Grad Plus contributed to an increase in high-cost graduate degrees. Baum also admitted that the federal government's "infinite borrowing" policy is "not optimal," and has resulted in graduate students racking up hundreds of dollars in student debt to get a master's degree in fields like creative writing (as reported in Inside Higher Ed).

College leaders are alarmed at the prospect that Congress will kill the cash cows that are placidly grazing in the business schools and liberal arts departments. They claim that putting a cap on grad-school borrowing will prevent low-income students from getting medical and law degrees and other valuable post-graduate credentials.

More bullshit. There is no good reason for graduate school tuition to be as high as it is, especially for programs that don't enable their graduates to get a higher salary.

Here's one example that illustrates my point. In 2017, Inside Higher Ed published an article on the high cost of getting a master's degree in data journalism from Columbia University. According to Columbia's own estimate, a student would pay $147,000 for this degree, including $106,000 in tuition and fees. And that was seven years ago.

Is a Columbia master's degree in journalism worth the cost? Probably not. Charlie J. Johnson, an editor for the Chicago Tribune at the time, was quoted in the Inside Higher Ed article as tweeting that “[a] $100,000 master’s degree in journalism is a stupid thing.”

Suppose Congress does away with the Grad Plus loan and puts a reasonable cap on graduate student loans. In that case, it will kill the universities' cash cows--high-priced graduate degrees that are wildly overpriced and often worthless. 

However, I'm not holding my breath.  At this very moment, the higher education industry's lobbyists are creeping around Capitol Hill, smoozing our national legislators, claiming that limitless student loans for grad school must be perpetuated.  

These sleazeballs lobbyists will argue that the present gravy train must not be derailed because socioeconomically disadvantaged students desperately need a worthless graduate degree or professional degree, no matter what it costs.

I predict that the Grad PLUS program will be retired. Nevertheless, the federal student loan program will continue to underwrite wildly overpriced graduate programs that will leave graduates with mountains of student debt--debt that they cannot discharge in bankruptcy.

Will Congress Kill Cash-Cow Graduate Programs?