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Graduate Journey Resource Center

Discover valuable resources to assist you in your program search and decision-making process.

Graph showing debt to income

Debt-to-Income Ratio and Grad School

What is debt-to-income ratio?

If you’ve ever applied for a loan, or tried to refinance something, you may have heard this phrase before. It basically refers to the ratio of how much you can borrow based on how much you earn.

In the higher ed world, it refers to how much debt you should accrue in the form of school loans based on the salary you currently make or expect to make with your new graduate degree. For example, acquiring $150,000 in school loans to attend a private university for a master’s in social work that has a median annual salary of $50,000 isn’t a wise debt-to-income investment.

How to avoid grad school debt

Recently, articles have surfaced exposing prestigious universities that charge exorbitant tuition rates for graduate degrees translating to less-than-stellar salaries. Graduates are finding themselves buried under a mountain of debt they feel like they’ll never overcome.

One way to curb some of that impending debt is to consider a public university versus a private one. While many grad students may have dreams dripping with Ivy, many public universities have excellent programs and reputations without the inflated price tag that comes with the privilege of prestige. The average published tuition and fees at private nonprofit four-year institutions was $37,650 in 2020–2021 versus $10,560 for public four-year institutions the same school year.*

That’s not to say that private institutions aren’t worth it, as many of them offer a good deal of financial assistance, waivers and scholarships that may offset the higher overall costs. It’s just important to take into consideration the future earnings that your master’s degree will afford you. Your field of study may influence your institution's decision as well. Sometimes prestige matters, such as is the case with medical school. Be aware of the expectations that your future job prospects will demand from your education.

Making the right choice for you

An education is one of the largest investments anyone will make next to buying a house, and the same careful consideration should be given to finding a program that you can afford and that can give you the career leverage that you desire.

* Trends in College Pricing and Student Aid 2020: