Does borrowing to go to college or grad school make sense? It depends. Photographer: Craig Warga/Bloomberg
Does borrowing to go to college or grad school make sense? It depends. Photographer: Craig Warga/Bloomberg

Borrowing to pay for school can be one of the best investments you can make -- or one of the worst. The question is whether the increase in debt today will be offset by a more enjoyable and lucrative career in the future. New evidence suggests that the decisions of a few people to go to graduate school and attend for-profit colleges are making the overall numbers look worse than they might be otherwise.

Here’s a picture that gets a lot of people worried:

That looks bad, but there is good news, because the growth rate in the total amount of student debt outstanding has been slowing since 2010:

The slowdown in debt growth is notable, considering that many more students attend school than a few years ago.

The picture does look different when you focus on certain types of borrowers. The typical graduate of a for-profit college left school with 79 percent more debt in 2012 than the typical graduate of a private nonprofit college, and almost 3 1/2 times as much debt as the typical graduate of a public university. For-profit colleges are somewhat less popular than they were a few years ago but they still account for almost a fourth of new student loans.

Then there are the graduate students, who are the subject of a new report from the New America Foundation. Few people used to go to school after college and those who did generally ended up earning enough as doctors, lawyers or other professionals to make the extra debt worthwhile.

Now, however, the most popular advanced degrees are in education, public policy and social work, fields that don't pay as well. The inflation-adjusted monthly debt payment for a typical borrower with a Master's in Education, for example, has increased by about 11 percent each year since 2008. But the number of people working in education services has been little changed for the past two years. That could be a bad deal for borrowers although it hardly represents a crisis: many of those earning these degrees are eligible for income-based repayment plans and loan forgiveness, which will reduce the real burden of these debts.

Just because things aren't as bad as they might look doesn't mean they can't be better. Canada has done an impressive job of reducing its student-debt burden over the past 12 years. Maybe the U.S. can do the same.

(Matthew C. Klein is a writer for Bloomberg View. Follow him on Twitter.)

To contact the writer of this article: Matthew C. Klein at mklein62@bloomberg.net.

To contact the editor responsible for this article: James Greiff at jgreiff@bloomberg.net.