Harvard Graduate School of Education February 15, Anthony M. Sozzo Associate Dean New York Medical College NASFAA GPIC Chair

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1 Harvard Graduate School of Education February 15, 2013 Anthony M. Sozzo Associate Dean New York Medical College NASFAA GPIC Chair

2 What they are writing about value of Grad school Is gradate school worth it? Some Data A medical and law school review. What they are writing about PSLF: Storm Clouds? High debt review: Income Driven Plans PSLF NASFAA GPIC Update Your comments!

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4 Judging the Value of a Graduate School Education A great education is priceless but for our purposes, let s discuss a few things you should look at when deciding to take the plunge and enter graduate school. Cost Relevance + Market Demand Starting Salary > Mid Career Salary Experience of Past and Current Students Years To Achieve Return On Investment Consider the following: Lost years of productivity while in graduate school working part time or not at all Loan amounts vs. starting salary Total amount paid back for loans vs. starting salary and length of time expected in career From Business Insider January 26, 2013

5 Is Graduate School Worth the Cost? TARA KUTHER, PH.D. 6 Reasons Why Graduate School Pays Off DR. DON MARTIN Some Say It's Time to Put a Warning Label on Graduate School - Graduate Students - The Chronicle of Higher Education CHRONICLE Grad School Math: Which Degrees Are Worth the Debt - DailyFinance BRUCE WATSON Why is grad school enrollment declining? USA TODAY College By Jon Fortenbury, USATODAYEDUCATE Graduate degrees: Are they worth it? WASHINGTONPOST Grad School: Still Worth the Money? - Forbes Harvard Business School Baker Library 2009 SHAWN O'CONNOR Is Graduate School Worth It? 6 Things To Consider Before Taking The Plunge BUSINESSINSIDER

6 Why a Business Major is No Longer the Ticket DAN KADLEC Law Grads Face a Brutal Job Market WSJ Report: Law Degrees Great For Everything But Lawyering GOTHAMIST Law school - still a dodgy investment, analysis suggests LAW America's Longest-Serving Law Dean Defends the Value of a Law Degree - People - The Chronicle of Higher Education Rudy Hasl, CHRONICLE For Law School Graduates, Debts if Not Job Offers NYTIMES.COM Law Schools' Applications Fall as Costs Rise and Jobs Are Cut ETHAN BRONNER

7 Business majors, new research suggests that The major is overcrowded with underachieving students and that businesses themselves value the discipline less. Not pursuing an undergrad business degree can actually boost the chances of getting into MBA programs. Business students learn the least in college and that a new report from the National Survey of Student Engagement concludes business majors study less than other college students. What employers really want, according to workplace surveys, are college grads who can think effectively communicate and write. Students can obtain these skills from any major, but plenty of research has concluded that students who earn degrees in the liberal arts enjoy a better chance of meeting these job requirements.

8 Business schools the good news Graduates of the 57 top MBA programs will earn approximately $2.4 million in base pay and bonuses over a 20-year career, according to PayScale research commissioned by Businessweek. Graduates from the very best business schools earn the most throughout their career, with Harvard Business School graduates earning an average of about $3.6 million, and University of Pennsylvania s Wharton School and Stanford Graduate School of Business graduates earning $3.3 million on average. After 40 years of working (which is increasingly the norm today), individuals who hold MBAs will have earned between $5 million and $8 million and will have spent only about three to five percent of that on the cost of business school (including opportunity costs and student loan interest).

9 A look at the Medical and Law fields Data Provided by Jay Youngclaus Senior Education Analysis AAMC

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11 2011 Data Medical Law Graduates 17,400 44,500 Grads w/ Debt ~86% 15,000 38,400 Schools Indebted Grads per School Minimum Maximum then 644 Median

12 Virtually all M.D. graduates earn a residency slot After residency, job prospects very strong: AAMC projects a physician shortage of more than 90,000 by 2020 roughly half in primary care and half in specialists.

13 AAMC provides resources to schools & students Organizes annual Professional Development Conference for Health Professions schools financial aid staff ~ 175 attend every Jan. COSFA The Committee on Student Financial Aid a national AAMC Financial Aid committee representing all medical school financial aid administrators. FIRST: 5 person staff providing financial information resources, services, and tools to schools & students 2 staff annually conduct exit and other debt mgmt. presentations on-site at ~50 schools

14 AAMC provides resources to schools & students Created a Medloans Organizer and Calculator that students and others can use to track their loans and get personalized repayment scenarios outlining IBR and PSLF and other options. The only tool that accounts for residency years Financial Literacy 101 Part of AAMC FIRST Financial Aid Toolkit Part of AAMC FIRST

15 Accreditation demands attention to education debt of graduates Fewer graduates to reach than law schools Loss of Economic Hardship Deferment focused attention on IBR IBR is the only way for most to make payments during residency AAMC provides resources to assist PSLF is attractive to some

16 PSLF is one option for repayment/ forgiveness in return for service; attractive because residency years can count towards 10 year total In GQ survey, 28 percent plan to enter loan forgiveness/repayment program, about half of these identify PSLF (~1 in 8 considering)

17 Dr. Median borrows $162K during med school Primary Care Residency: 3 yrs. $400-$480/mo. Then, non-profit job with $120K salary 7 yrs. $1,500 to $1,700/month After 10 years: Paid $151K ($93K in interest) $145K Forgiven

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19 Safety Net or Windfall? NewAmerica.net In NEWAMERICA How do the pending changes to IBR affect borrowers over time, as their incomes change? How much can a borrower earn and still receive loan forgiveness? How much will he have forgiven if his income follows a certain path over his career? How does the program compare to other repayment options offered on federal student loans, like consolidation, over the long term and in terms of monthly payments? Can a borrower end up paying more overall under IBR than other plans? Will the pending changes provide windfall benefits to higher-income borrowers?

20 Student Aid Policy Analysis Partial Public Service Loan Forgiveness Loophole Will Yield Substantial Financial Benefits to Some Medical School Graduates Mark Kantrowitz Publisher of Fastweb.com and FinAid.org December 19, 2011 A loophole in the public service loan forgiveness program will provide substantial financial benefits to some medical school graduates due to the forgiveness that can accrue during the medical internship, residency and fellowship. This partial forgiveness may cost the federal government as much as $500 million to $1 billion a year on a net present value basis.

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22 2011 Data Medical Law Graduates 17,400 44,500 Grads w/ Debt ~86% 15,000 38,400 Schools Indebted Grads per School Minimum Maximum then 644 Median

23 Academic Year Public Law School Private Law School $75,728 $124, $68,827 $106, $66,045 $100, $59,324 $91, $57, 170 $87, $54,509 $83, $51,056 $78, $48,910 $76, $45,736 $72, $46,499 $70,147 Source: The American Bar Association

24 Year Median Education Debt All Indebted Graduates Private School Graduates Public School Graduates 2011 $162,000 $180,000 $155, $160,000 $180,000 $150, $160,000 $177,500 $150, $155,000 $180,000 $145, $140,000 $166,913 $132,000

25 Median Type Starting of Employment Salaries: Median Starting Salary Law Firm $95,000 Law Firm $95,000 Law Firm 2-25 $72,000 Public Interest Organization $45,000 Public Defender $47,500 Local Prosecutors $50,000 Civil Legal Services $42,000 Source: NALP 2010 salary surveys

26 $312K $260K $250K $245K $222.5K $197.5K $180K $180K $160K Source: MGMA 2011 Data $145K

27 Law Schools the Good News A lawyer s lifetime earnings, which average $4.03 million, according a Georgetown University study. Thus over a 40 year career, a lawyer will earn nearly double the lifetime earnings of (or $2 million more than) a person with only a bachelor s degree. As this data clearly demonstrates, the full cost of business and law school is only a small percentage of the total income the graduates of these schools will likely earn throughout their lifetimes. The investment a student makes in these degrees today is likely to produce at least a 10x return over his or her career.

28 In $ Thousands $750 $675 $600 $525 $450 $375 $300 $225 $150 $75 $0 Age: ($75) ($150) ($225) Med School Residency Practice Forbearance 25 yr. Extended Medical School Debt

29 In $ Thousands $750 $675 $600 M.D. Savings $525 $450 $375 $300 $225 $150 $75 $0 Age: ($75) ($150) ($225) Med School Residency Practice Forbearance 25 yr. Extended Medical School Debt

30 In $ Thousands $750 $675 $600 M.D. Savings $525 $450 $375 $300 $225 $150 $75 $0 Age: ($75) ($150) ($225) Med School Residency Practice Forbearance 25 yr. Extended Medical School Debt B.S. Finance Savings

31 B.A./B.S. Business/Finance M.D. Internal Medicine Starting Age Starting Salary $40,000 in 2005 $172,000 in 2012 Retirement Savings at 65 $1.5M $3.1M Assumptions: Salaries grow at 3.5% per year, savings grow at 8% annually B.A./B.S.: Annual savings rate of 5% from 25 to 34, 10% from 35 to 65. Works 44 years M.D.: Annual savings rate of 2% from 30 to 39, 10% from 40 to 65. Practice for 36 years

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36 Issues/Progress

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38 GPIC had conversations with HHS, FSA and the TIVAs Servicers

39 The NASFAA GPIC committee is still exploring the possibility of an informational Capitol Hill visit in late March or early April, which would involve assembling important information and statistics about the graduate professional community, its students, and how important their contribution is to this country. GPIC is also working with NASFAA s Training and Regulatory Assistance staff in hopes of offering a webinar focusing more on graduate/professional community training needs.

40 Of the 18 GPIC sessions proposed, the committee had 17 sessions approved for the NASFAA Conference under the GPIC track. The approved sessions: Graduate/Professional Town Hall Meeting Legislative Update from the Graduate and Professional Perspective Federal Update: HRSA's Title VII and VIII Campus-Based Programs Utilizing Technology to Communicate with your Students: Advanced Session Utilizing Technology to Communicate with your Students: Beginner Session Bet on a Sure Thing - Successful Financial Aid Literacy Initiatives from the Aid Administrators Perspective Is it Time for One Loan? Hot Topics for Graduate & Professional Financial Aid Administrators IBR, ICR and PAYE - What's the Difference? Cost of Attendance for Graduate Students Grad/Professional Counseling Dilemma-Federal vs. Private Loans Surviving Financial Aid SAP at Graduate and Professional Schools The Relationship among Student Wellness, Money, and Debt Borrower-Based Year and Graduate/Professional Students Counseling Veterans Federal Direct Loan Consolidation: How Is It Working? Utilizing "Cash Course" for Graduate and Professional Schools - Why Not?

41 Thank You Tony Sozzo