Helping College Students in Ohio Deal with Debt That is Higher Than the Average

This is a guest post by Rachel Higgens, who is interested in the shifts in college enrollment that have changed many aspects of the modern higher education experience. Campuses are more diverse than ever before, but in many cases they are also more expensive — a pressing issue addressed in some detail in Rachel Higgins’ post. Rachel looks at the effects of rising student debt on Ohio co-eds and their families against the backdrop of skyrocketing educational indebtedness nationwide. Rachel discusses these and other issues in more depth on http://www.AccreditedOnlineColleges.org, a website devoted to online colleges and the often lower-cost educational opportunities available from these institutions.

Helping College Students in Ohio Deal with Debt That is Higher Than the Average

Throughout the US, college students are graduating with exorbitant debt, with students in Ohio carrying some of the heaviest burdens in the nation. A 2010 report on the cumulative student loan debt of graduates from four-year public and private nonprofit colleges found that across the US, average debt levels vary widely among the states. Most high-debt states are concentrated in the Northeast and Midwest, while low-debt states are mainly in the West. In the Midwest, Iowa, Minnesota and Ohio were ranked as the highest average debt states, with figures hovering around $27,000 to $29,000 per student. New Hampshire, the state with the highest levels of student debt, was only a little higher at $31,048. On the other end of the spectrum, in Utah, Hawaii and New Mexico, the average student debt averages around $15,000 to $16,000. Analysts for the study suggest the proliferation of Midwestern and Northeastern students graduating with high levels of debt “may be related to the fact that a larger than average share of students in the Northeast and Midwest attend private nonprofit four-year colleges.”

“In the current economic climate, recent college graduates who borrowed for their education face particular challenges in paying back their student loans,” say the study’s authors. “The unemployment rate for young college graduates rose from 8.7% in 2009 to 9.1% in 2010, the highest annual rate on record.” Students in the Class of 2010 and their families suffered through the economic downturn while in school, largely widening the gap between rising college costs and the ability of students and their parents to afford the education. State budget cuts and sharp tuition increases only furthered the need to borrow. While student and institutional grant aid rose during this time, allowing students to avoid dropping out for financial reasons, in the longterm it will likely lead to even greater accrued debt to be repaid.

In some cases, student debt can even exceed six figures. A recent report from Mark Kantrowitz, publisher of Fastweb.com and FinAid.org, found that as of 2007-2008, 1.5% of all undergraduate and graduate students are finishing school with six-figure student loan debt. When studying only law school and medical school graduates, percentages soar to 36.2% and 49%, respectively. Approximately 24% of undergraduate students with six-figure student loan debt graduated from public colleges.

While results from the Project on Student Debt study find 68% of college graduates in Ohio finishing school with an average student loan debt of $27,713, there is evidence that the figure is actually significantly higher. For instance, the study does not take into account student debt figures from for-profit schools or for students who drop out, which, when accounted for, would likely paint an even more troubling picture. Among public colleges, reports from the US Department of Education find that over the past 10 years, debt across the nation grew the fastest at Ohio schools University of Cincinnati, at 58% and the University of Akron at 48%.

Mark Evans, financial aid director at Kent State, attributes the spike in borrowing to several factors, including a hike in the federal loan limit from $23,000 to $31,000. Lowered state support of Ohio’s public universities and state reductions in the Ohio College Opportunity Grant, available to Ohio residents and based on family need, also factor in. “If you were to take a look at our large generation of high-need students, our two-year live-on-campus residency requirement, reductions in state aid, there’s an explanation,” says Evans.

Michelle Ellis, financial aid director at University of Akron, asserts that an increase in student loans is also due to students using loan money to fund living expenses as well as their tuition and fees. “Folks are strapped,” says Ellis. “That could be because to the kind of student who comes to UA,” many of whom are from low-income backgrounds and the first of their family to attend university.

For graduates in Ohio and throughout the US, policy makers may soon offer assistance. Federal lawmakers have been working to to increase enrollment in Income-Based Repayment and still-pending “Pay as You Earn” repayment plans. Earlier this year, Minnesota Senator Al Franken introduced the Understanding the True Cost of College Act, a bill that attempts to bring greater transparency to student loan organizations by requiring the creation of a uniform financial aid award letter using standardized financial aid terms.

Larry Lesick, vice president of enrollment at Ohio Northern University in Ada, says that the school works to alert students when they are making decisions, such as changing majors, that would delay their graduation, asserting the school steered 150 students away from potentially harmful financial decisions in 2011. While college still allows for excellent opportunities for students, the burden of debt can have far-reaching consequences for graduates and their ability to pursue their goals. In order to avoid long-term economic consequences for families in Ohio and across the US, students and their parents need to be educated on the true costs of college and what would constitute a realistic time frame for paying off debts.