Drowning In Debt

In 2011, 15 percent of Ohio University graduates who started payments defaulted on their student loans — the highest default rate of large public higher education institutions in Ohio and the second highest in the nation.Although Ohio University may have the most dramatic default rate in the state, six other Ohio schools were ranked among the top 20 for highest default rates at large public colleges and universities, defined as those with 5,000 or more students starting to pay their loans in 2011, according to data from the U.S. Department of EducationThis trend has been steadily increasing in Ohio for the past few years. The number of Ohio University graduates unable to pay off their loans has tripled in comparison to the 2005 default, with 15 percent of graduates defaulting in 2011.Determining why Ohio graduates have more difficulty here is hard to pinpoint, but many factors, from financial aid to job availability, could play a role in creating this climate.CausesOne factor is college students’ increasing reliance on students loans — a trend common across the country. In Ohio, many students are taking out large loans, as shown in a Project on Student Debt report. Ohio placed 11th in both states with the highest number of students taking out loans and states with students who take out the largest amount of loans. At Ohio University, almost 19,000 undergraduate students across all campuses received $151 million in student loans, almost $70 million more than grants and scholarships awarded, said Valerie Miller, director of Ohio University's Office of Financial aid.She also said the average student graduates with over $25,000 in debt.However, this trend does not correspond with a decrease in other areas of financial aid. According to data from the Ohio Board of Regents, the government body that oversees public universities in Ohio, state and federal scholarships and grants have increased over the past five years in Ohio.“It is difficult to put a reason on why a student may default,” said David Cannon, vice chancellor of finance and data management for the Ohio Board of Regents. “Ohio has been increasing state funding, so I am not sure you can tie default rate to state funding.”Although Ohio has increased funding for financial aid, the cost of higher education has also increased in the past decade. The average cost of tuition and fees for four-year undergraduate programs at university main campuses in Ohio has increased 56.6 percent since 2003.In addition, although Ohio is giving state grants to about the same number of students as the national averages, the amount students are receiving is on average between $1,000 and $2,000 less than the national average.However, that difference is lessened when looking at institutional grants because institutional grants are given at larger amounts to about twice the number number of students compared to the national average.Another factor that might contribute to high default rates could be the economic climate in Ohio, which has resulted in difficulties for graduates looking for jobs.The number of graduates with full-time employment has been increasing after about a 6 percent drop in 2009 from the previous year’s employment rate of about 61 percent. In 2011, about 59 percent of Ohio graduates who stayed in the state were employed full time.In addition, the average yearly salaries for Bachelor’s degree recipients in Ohio decreased by over $2,000 from 2008 to 2011, according to the Ohio Board of Regents, reflecting another national average. EffectsThe effect of pricey higher education impacts both the accessibility of college for lower socio-economic students and the quality of higher education as a whole, said Jaylynne Hutchinson, an educational studies associate professor at Ohio University. She also talked about the detriments low diversity has for a university, which can be intensified by a high cost of attendance.“A university experience is really a place for exposure to the world and to ideas that are different,” Hutchinson said. “Really coming to understand each other as human beings and the different ways we live in the world, I think, requires interacting with people and hearing about their life experience.“That is one of the best ways for learning about how we live together in a democracy, and so I think a big part of the university experience is that we have to share this space with other human beings.”Hutchinson highlighted several examples of education options that try to expand access to disadvantaged students, such as the growth of online education, but she also said the public should think about whether these new ideas actually help achieve more diversity and a higher quality education.“We have to ask ourselves how do these new and innovative ideas serve the social goals of a democracy and the deep values embedded in democracy that we’re so far away from, and secondly, does it provide an incredibly inclusive opportunity for all people because if it just goes back to serving middle-upper-class white folks then there’s no reason to even do it,” Hutchinson said.She also emphasized the need to combat poverty within the U.S. and “how our economy is the structure that’s created the issues of poverty.”SolutionsLocally, Ohio University increased financial aid for 2015’s incoming freshmen. In addition, every student has a financial aid advisor and is required to complete entrance counseling before borrowing a Federal Direct Loan for the first time, said Miller.“With the inception of the new OHIO Signature Awards program for first year Athens campus students in the fall of 2015, the University provided an increase of over $2.1 million in institutional funding to support merit-based, need-based and merit/need-based awards,” Miller said. “Additionally, for high-need returning students, the new Gateway Assist Award was implemented to offset the tuition increase from 2013-14 to 2014-15.”The Board of Regents has also taken steps to try to increase financial aid availability.Cannon said Ohio dropped the Ohio College Opportunity Grant funding during the recession, but has increased it over the past four years “not to the level it was before the recession, but (they are) trying to help need based students.”“The question of state funding is should the state fund need-based financial aid or increase state subsidy which helps all students?” Cannon said. “Ohio has increased state support for state share of instruction and has applied tuition caps to limit the increase of costs of higher education.”Other recent changes within the public university system that emphasize degree completion also try to decrease the amount students pay for school, such as public university funding changes, guaranteed tuition and tuition caps, said Cannon.“If a student completes (his or her degree) and gets a job, they will be much better funded to pay loans than students that take on debt and do not complete,” Cannon said. “Data shows those not completing a college degree make lower wages and would be more difficult to pay loans.”In conjunction with local strategies, Hutchinson believes larger changes need to happen across the nation in order to expand access to higher education to the public.“I don’t want to make it sound like any of these things are easy, but I do think they can be done, and there are models around the world and even in our own nation where they’ve been done.”She said these changes include increasing state funding for higher education, which means increasing taxes, closing corporate tax loopholes and examining where current state funds are being allocated.“To benefit our nation and society as a whole, I think it would have to come as a paradigm shift… it’s not one or the other; it’s not working at the local or individual level or working at tearing down and rebuilding a brand new system. It’s both,” Hutchinson said. “I would love it if OU came up with some (innovative) ideas to make college more accessible financially and to seriously try to be representative of the diversity of our nation and hopefully as people went through that system their values would begin change.”