Georgetown and New York University sit alongside the University of Phoenix on the top of a new list released today that highlights how a handful of American universities, for-profit and non-profit alike, are capitalizing on a boom in master's degrees and borrowing by graduate students.
An analysis by the Center for American Progress found that just 20 American schools enroll a full 12% of all the country's graduate students, and were responsible for $6.5 billion in federal loan dollars in 2013-14 — 20% of all graduate federal loans issued that year.
"This is a tremendous concentration among a very small group of institutions," said Elizabeth Baylor, the director of postsecondary education at the Center, who authored the analysis.
These 20 schools were the nation's top creators of graduate-student loan dollars in 2013-14
At the top of the list is Walden University, a massive for-profit school focused on graduate degrees, owned by Laureate Education. Its students took out three quarters of a billion dollars in federal loans in a single year. The University of Phoenix, a perennial player in the for-profit sphere, was third, with almost half a billion dollars.
Nonprofits, some of them extremely prestigious, are also responsible for hundreds of millions of dollars in graduate-student loans. Grad students at New York University were the fourth-biggest borrowers in the country, taking out $471 million in loans. The University of Southern California was fifth, and Columbia, Georgetown and George Washington had graduate students take out more than $200 million on loans.
This is partly explained by the nature of these top-tier schools, which employ some of the world's leading academics and operate in expensive locations, where students must borrow more due to high living costs. But that doesn't mean their graduate degree programs aren't also cash cows.
"Many of the grad programs at nonprofits do all the same things that your typical for-profit does," said Jason Delisle, an analyst at the New America Foundation. "They recruit, they take out metro ads — and make tons of money for the school."
For prestigious institutions like NYU or Columbia, Delisle said, master's degree programs can be easy moneymakers, generating revenue without diminishing the prestige of the schools' undergraduate programs, law, or medical schools.
The vast majority of the loans, CAP's Baylor said, likely went not towards professional degrees like those in law and medicine but towards master's degrees. Eighty-one percent of the degrees given by the top 20 institutions were master's degrees.
"For some of these schools, they're likely admitting a lot of master's degree students, charging them full-freight without any type of institutional aid, and then using that revenue to propel the rest of the organization," Baylor said.
At for-profit schools like Walden, the University of Phoenix, and Kaplan University, online graduate degrees have become an increasingly desirable source of revenue. Students stay enrolled in such programs for longer and are less likely to drop out than those in the associate's degree or certificate programs, which have traditionally made up the core business of for-profit schools.
Graduate students make up just 15% of all American students, but last year, they took out more than a third of the $100 billion in federal loans. The high debt is helped along by federal policy that allows graduate students to borrow far more federal money than dependent undergrads, including money to cover their living costs.
Two for-profit medical schools, both located in the Caribbean, made the list: the Ross University School of Medicine and the school of medicine at St. George's University. Caribbean medical schools, which lure students who struggle to gain acceptance into traditionally competitive American universities, are vastly more expensive than their nonprofit American counterparts, but their students often fail to gain residencies after graduation.
The list includes just one public institution, Rutgers University.