It's no secret that as the cost of attending college has increased over the last several years, so too has the amount of loan debt students are taking on. In a session on Monday, presenters shared the most recent data on student loan debt, and different approaches that colleges are taking to help reduce the financial burden many students face.
Debbie Cochrane, research director at The Institute for College Access & Success, showed that over the course of a decade (1993-2012) both the rate of borrowing and the average cumulative amount of debt at graduation have increased for students attending four-year institutions.
Still, the rate of borrowing, the average cumulative amount of debt, and the average annual amount of debt varied depending on the type of institution, the student’s family income level, and race and ethnicity, Cochrane noted. Students who receive Pell Grants are also more than twice as likely to borrow, compared with students who do not receive Pell Grants, Cochrane said.
“This is actually counter, in many ways, to some of the media perceptions,” she said. “We think low-income students are just fine, they don’t need to borrow. But most of the data we see shows that low-income students are actually not having their entire [financial] need met.”
Ann Trollinger of the University of North Carolina at Chapel Hill discussed the university’s debt reduction program, The Carolina Covenant. While North Carolina remains a low-to-moderate tuition state, it has still seen big increases, she said, and the school’s financial aid policy has become the method used to secure college access and affordability.
The Carolina Covenant, a program reserved for students with the highest need, is available to students from families with annual incomes at or below 200 percent of the federal poverty guidelines. The median family income for students in the program is $27,497, she said.
For Covenant scholars, aid packages consist of grants, scholarships, and work-study. Students also have the potential to graduate debt-free, as there are no student loans automatically packaged for up to eight semesters.
Still, Trollinger said, students in the program continue to borrow for a number of reasons. Some borrow to attend summer school or to study abroad. Others replace their Expected Family Contribution with unsubsidized student loans, or convert their work-study award into a subsidized loan. Overall, though, the Covenant program has appeared to have a positive impact on students, as both the four-year graduation rate and GPA at graduation have increased.
Finally, Laurie Wolf of Des Moines Area Community College discussed how the school has modified its student loan packaging, its early alert system to help reduce borrowing and avoid default, and an emergency aid program available to some students.
In 2008-09, Wolf said the college began modifying the way it packages student loans, because many students would come to the financial aid office asking for the full eligibility in loans. That prompted the school to only package what the student is eligible for as far as need, and make loans available if students come to ask for more. The average debt dropped from about $16,000 to about $13,000.
Through the school’s early alert system, faculty notify the financial aid office if students display certain behaviors that might indicate a financial struggle – if the student talks about financial problems, if the student consistently scores poorly on certain assignments, or if the student misses several classes in a row. Since August 2014, there have been 4,500 referrals to the financial aid office. Wolf said they found that often students had personal problems that could be eased with personal outreach. The school found alternate transportation if a student had car trouble, for example. A limited amount of emergency aid (up to $500) is also available to some students, she said.
“We’re trying to identify what the things are that they need to help them right now that does not involve giving them more student loan money,” Wolf said.
Publication Date: 7/11/2016