Changes coming to graduate student loans

This is Getting By Better, the daily update that pays off. Let's get back to our question of the day. We asked how many of you have paid off your student loans. The majority of you said you're not even close to paying them off, almost 75 percent in fact. We spoke with people who say they are at a crossroads about whether to go back to school and loans are a big reason why. For people who are looking to go back to school, I know that there have been a lot of recent changes to FAFSA that are really hard to navigate, even repayment options. Well, one of those big changes is a cap on how much graduate students can borrow. Consumer investigator Rachel DePompa explains what parents and grad students need to know in today's Watching Your Wallet. The federal graduate plus loan program is going away June 30th and grads will face new borrowing caps. Robert Farrington, the founder of The College Investor, says starting July 1st of this year, there will be a new direct graduate school loan. And the limits are based on whether you're going to grad school or professional school. Graduate school is typically master's degree programs and other programs like that. And professional schools are certain designated programs that lead to a professional designation. Typically, we think of doctors, lawyers, dentists, things like that as professional school. Things like master's of education, MBA, master's of social work. Those are graduate schools. Farrington says graduate school borrowing limits will now be $20,500 per year, up to $100,000 total. And professional school will be $50,000 per year, up to $200,000 in total. These are very strict caps compared to the current system, which was uncapped. A federal reserve study just came out in December that shows that about one-third of current graduate students would probably borrow beyond those caps, based on the cost of their programs. Farrington says graduate students are going to have to make some tough choices and it's more important than ever to really understand the return on your education investment. He says you will want to understand what you can expect to earn after graduation as a result of this degree. You'll also have to think about does it make sense to borrow money up to the limits, and if you go beyond, you're going to be looking at private student loans. With this, watching your wallet, I'm Rachel DePampa.