Student debt a growing problem
Average graduate owes about $25G
CAPITAL REGION When Jackie Hayes completes her education, she will have earned a doctorate. But it will have come with a hefty price.
Hayes has already taken on $72,000 in debt to pay for her education. She borrowed $22,000 for her undergraduate degree and has borrowed another $50,000 for graduate school.
“It’s terrifying,” said Hayes, 30, who is earning her PhD in Latin American Caribbean studies. “A lot of students are unable to pay for their loans at this point.”
Hayes is a member of Save Our SUNY, a coalition of students, faculty and staff that opposes tuition hikes and funding cuts to higher education. One of the group’s big concerns is student debt.
In the past two decades, students have been borrowing more and more for their education. The rising cost of tuition and fees, combined with state budget cuts to higher education, have resulted in soaring debt, as students and families take on more of the responsibility of footing the bill. The dismal economy is prompting more students to go to college to boost their prospects in the job market, but at a greater cost than ever.
Last week, students, faculty and staff from CUNY and SUNY schools gathered in Albany to call on the Legislature to act.
“We need to put money back into higher education,” said Kathleen Jordan, a college senior who chairs the board of directors for the New York Public Interest Research Group, one of the groups that helped organize the protest.
According to the California-based Institute for College Access & Success’ Project on Student Debt, college seniors who graduated in 2010 carried an average of $25,250 in debt. In New York, the average debt was $26,271 — the 10th highest amount in the country — while 61 percent of students graduated with debt.
The average debt of University at Albany graduates in 2010 was $24,146, while the average debt for Rensselaer Polytechnic Institute graduates was $30,125. It was $29,700 for Siena College graduates, $19,850 for Skidmore College graduates, $30,281 for College of St. Rose graduates, and $25,621 for Union College graduates, according to the Institute for College Access & Success.
These figures have risen dramatically in the last 20 years. In 1996, the average student debt was $12,750. By 2000, it was $17,350, and by 2008 it was $23,200.
Earlier this month, the federal Consumer Financial Protection Bureau said the amount Americans owe on student loans has surpassed $1 trillion.
“Unlike other consumer credit products, student loan debt keeps growing at a steady clip,” the bureau’s student loan ombudsman, Rohit Chopra, said at a conference hosted by the Consumer Bankers Association in mid-March. “Students borrowed $117 billion in just federal student loans last year. And students continue to borrow private loans, which lack the income-based repayment and deferment options of federal student loans. If current trends continue, there will be consequences for all of us.”
Sandy Baum, professor emeritus of economics at Skidmore College and an independent policy analyst for The College Board, a nonprofit association, said that much of the growth in student loan debt is the result of the rapid expansion of the for-profit college industry. “Those students are more likely to borrow, and they’re more likely to borrow more money,” she said.
“The real issue is not what the average debt is, but how many students graduate with unmanageable debt,” Baum said. “The real problem is that the job market is so lousy.”
Baum works on the board’s annual Trends in College Pricing report. The most recent report, released last October, found that between the 2001-02 school year and the 2011-12 year, in-state tuition and fees at public four-year colleges and universities increased 5.6 percent each year beyond the rate of general inflation, compared to 4.5 percent per year in the 1980s and 3.2 percent per year in the 1990s. During the same time period, tuition and fees at private four-year colleges and universities increased at an average rate of 2.6 percent per year beyond inflation, compared to 4.8 percent in the 1980s and 3.1 percent per year in the 1990s.
Baum said tuition increases at public schools have been bigger because “state spending is a disaster. You’re not going to see things level off until state funding starts to recover.”
In June, the State University of New York Board of Trustees approved a policy that will raise tuition $300 a year for the next five years. The first increase took effect in the fall, bumping in-state tuition from $4,970 to $5,270. Tuition for out-of-state undergraduates will increase 10 percent a year over five years. SUNY has called this a “rational tuition policy,” because it increases tuition by moderate, predictable amounts.
Under Gov. Andrew Cuomo’s 2012-13 proposed budget, SUNY and CUNY funding would remain flat. But this comes after state aid has been cut nearly 35 percent over the past four years.
Jordan said the budget cuts have had an impact in the classroom. Class sizes are larger, courses aren’t offered as frequently and departments have been cut. In 2010, the University at Albany eliminated five liberal arts departments — French, Italian, Russian, classics and theater — which sparked the formation of Save Our SUNY.
Jordan, a senior at Brooklyn College, said she will graduate with about $27,000 in debt. The current tuition at the school is $5,130. She said she receives a stipend for serving as chair of the NYPIRG board and also works as a maid and a baby sitter.
“It seems bizarre that I will still be paying my loans off when I’m 35,” she said. “But I feel confident that I can make it.”
James Searle, a doctoral student in English at the University at Albany, said that public education is suffering. “I had no idea when I was accepted here that I would be walking into such a crisis,” said Searle, who is originally from Seattle.
He is 27, teaches two classes, serves as a representative on the graduate students’ union and receives a $14,000 stipend. Expenses not covered by his stipend, such as books and conferences, are charged to a credit card that currently has about $9,000 on it. He said he knows graduate students with more than $100,000 in debt who are living on food stamps.
And SUNY’s rational tuition policy won’t solve these problems, he said. “It doesn’t address issues of affordability and access.”
He said he didn’t know whether funding for SUNY would ever be restored. “We call for that,” he said. “It’s a pipe dream for all of us.”
In March, the Consumer Financial Protection Bureau, which was established in 2011 with the goal of making financial products such as mortgages and credit cards more transparent for customers, began taking complaints from borrowers having difficulties with their private student loans. The agency said it would assist all borrowers experiencing problems taking out a student loan, repaying their private student loan or managing a student loan that has gone into default.
If scholarships and federal student loans do not cover the full cost of college, students often take out private loans to pay for the rest. But private loans do not come with the same borrower protections.
According to the Consumer Financial Protection Bureau, student loans have surpassed credit cards as the largest source of unsecured consumer debt.