National Student Loan Debt Reaches New Heights
National student loan debt has become a growing concern for many higher education students throughout the United States. In 2006, total student debt was under $500 billion and the current total is around $1.52 trillion. The state of Ohio is no different. Around 62% of Ohio college graduates complete their schooling with an average rate of debt exceeding $30,000. A program originally intended to invest in its citizens by making federal funds available for students to pursue college degrees now affects more than 44 million borrowers in all demographics and age groups. The only debt category higher than student loan debt is mortgage debt, as student loan debt has recently surpassed credit card and auto loan debt rates across the United States. Ohio ranks 14th out of all 50 states for statewide student debt incurred.
At Kent State University, around 60% of all undergraduate students take out federal loans to help pay for their college education. According to WOSU Public Media, Kent State has the highest average debt among all of Ohio’s public universities and colleges with 76% percent of students graduating with debt and the average debt reaching $33,234.
Executive Director of Financial Aid at Kent State University, Mark Evans, said there are many reasons why Kent State students end up with higher debt than other Ohio universities upon graduation.
“Financial aid is awarded to more than 90 percent of students across the eight Kent State Campuses and about 75 percent of undergraduates borrowed at least one loan while in school,” Evans said.
Evans said the reasons for Kent State’s high student debt varies among students, with Kent State’s requirement that students live on campus being one of the major factors.
“Our requirement to live on campus for two years adds $11,000 to your bill each year,” Evans said.
Brian Duchon, a financial aid counselor at Youngstown State University, meets with students to explain what financial aid is and advises them on what the best practices are to avoid unnecessary debt while they pursue their degree.
Duchon said students sometimes do not fully understand what they are getting themselves into and may not take the time necessary to comprehend specific loans and repayment options, resulting in many students borrowing far more than they need.
“It’s a very structured program,” Duchon said. “I think students don’t understand the details of student financial aid from beginning to end. Sometimes students don’t understand how much money they have accumulated. If you’re borrowing the maximum amount every single year and it is going to take you five years to graduate, you start to hit what is called the aggregate loan limit.”
The aggregate loan limit is the maximum amount the federal department of education allows a student to borrow during their undergraduate degree. If a student reaches that number, they are no longer eligible to receive any more loans. According to the Office of the US Department of Education, the number is $31,000 for undergraduate students. Duchon suggests students, along with utilizing the help of academic advisors, should conduct their own research on the federal student aid program to better understand how the program works.
“We see students who are coming into their senior year, they fill out their financial aid forms and they find out they only have $2000 left to borrow and do not know how to pay to finish school,” Duchon said.
Duchon said keeping tabs on how much money students have borrowed is a useful way for them to understand where they are at financially. Duchon said students sometimes do not understand the repayment options either.
“Once you stop going to school or drop below half-time enrollment, which is six credit hours by the federal student aid criteria, you are below six credit hours for six months,” Duchon said. “You are now in the repayment period and you have to start repaying on all of your student loans.”
Duchon said many students he has worked with have personally experienced difficulties with loan servicers, contributing to common frustration about loans and what their options are. Loan servicers are third-party for-profit companies in charge of managing and
“Students have had issues with getting clear answers from loan servicers or getting clearance on the most appropriate payment plan,” Duchon said. “I think that is something else that can really help contribute to their student loan and debt issue.”
Student debt collection has become a multi-billion dollar industry where many of the industry’s top companies, such as Navient and Great Lakes Corporation, have received numerous complaints from student borrowers. The department of education outsources student loan accounts to a handful of private companies who are paid monthly fees to make sure borrowers pay on time and they are in the correct repayment plan.
A new report conducted by the U.S. Department of Education’s Office of Inspector General found the department’s student loan unit failed to hold the student loan companies accountable for multiple instances where they did not follow the rules. You can view the report here:
Duchon said the student loan debt crisis is an issue which must be addressed so it does not continue to spill into other debt categories at its current rate.
“I think student debt is definitely something that needs to be consistently examined and really thought about in terms of how it is going to impact students long-term, and also our country and its economic stability,” Duchon said.
Matthew Fout, a recent graduate of Ohio University, is currently in the process of beginning his student loan repayment plan. During his time in Athens, Fout majored in journalism with a minor in sports administration. Fout said he had to take out unsubsidized federal loans in order to attend Ohio University. He is currently in the fourth month of repaying his student loans.
“It’s definitely something I think does not seem like quite as much money while students are in school but when you look at the repayment, it definitely can add up,” Fout said.
Fout said the student loan debt issue is spiraling out of control, as the cost of education is beginning to negatively impact other areas of student’s lives even after they graduate.
“I think student debt has always been a problem but I think it is getting worse with the costs constantly rising of universities, and also pairing that with life after college, it is leading into the cycle where a lot of kids coming out of college now have so much student debt they cannot afford to go out and buy a house or a car,” Fout said. “It is leading to a cycle where are not owning things, we are only renting.”
Fout said the underlying problem affecting student loans is the very structure of most universities– they are primarily interested in their own profits regardless of the cost it bears on the students.
“I think the only way it will change universally is if someone makes it high enough in the political stage to reform the education system and the costs because as it is now, everything is a business, and universities are no different,” Fout said. “Until they’re structured to not just make money off of students or unless they can get money from a federal source or any other systematic change, they are out there to be a business.”
Stephen Howell, director of financial aid at Ashland University for the past 34 years, said students face increasing difficulties to afford many private universities, such as Ashland University.
“We have certainly had conversations with students who are financially struggling,” Howell said. “Being a private institution, we have a higher cost than community colleges or public institutions.”
Howell said attending a community college, which offers college-level courses at significantly reduced costs compared to Ashland and other four-year universities, can help reduce the overall cost for many students and also allow them to complete transferable coursework.
“Maybe it would be better for some students to stay at home and go to a community college for a year or two where the cost is less, where they don’t incur so much debt, then after a year or two look at transferring in and finishing up being conscious of how much debt you are getting yourself into,” Howell said.
Howell said he believes student debt is definitely an issue that must be addressed going forward into the future, although his ability to help can be restricted at times.
“I do think it is a real problem the amount of debt students are getting into,” Howell said. “I think one of the challenges I find as the director is I have a hard time limiting what students borrow. We can educate them, point out the pitfalls and the payments they are going to have, but ultimately unless a student tells us, “Hey, I am not going to pay this loan when I get out,” the government doesn’t really give us the tools to limit borrowing.”
It is an asset but most of us are buying it as a liability. We are spending more than what the asset is actually worth. We do not buy houses like that and we do not buy cars like that but we do that for college and that is the problem.”
Aaron Greene, the founder of College Liftoff, works with families across Ohio to prepare for college. Greene helps students, typically starting in high school, determine what they want to do for a career and develop a strategy specific to the academic and financial needs of that particular student to save them money while attending their desired university. Greene started the central Ohio-based college planning firm in 2009. Since then, College Liftoff has helped over 600 families throughout the state prepare for college, saving them a combined $31 million.
Greene said there are multiple aspects to take into consideration in order to confront the topic of student loan debt.
“There are two sides to the problem,” Greene said. “There is a problem with evaluating what college costs should be and what they actually are, and students walking out with student debt that is disproportionate to the job they are taking on. I can’t have a teacher walking out making $30,000 to $35,000 per year taking home the same amount of debt as an engineer walking out making $55,000 a year.”
Greene said recalibrating the overall cost structure surrounding a student and the degree they wish to pursue can significantly help reduce the loans the student must take out. This is the strategy Greene uses when he sits down with families to determine what the best way forward is.
“We have to adjust the value structure to make sense for what the value of the degree is in the end, and then go back and hold the universities accountable to that cost structure,” Greene said.
Greene said many parents and students alike do not understand what steps they can take to save themselves money while pursuing their degree. Greene said there must be more public awareness about the tools available to students who do not want to be bogged down by excessive student loans.
“The inevitable thing with college is that you are buying it,” Greene said. “It is an asset but most of us are buying it as a liability. We are spending more than what the asset is actually worth. We do not buy houses like that and we do not buy cars like that but we do that for college and that is the problem. We are not putting it through an evaluation process that actually makes sense according to what the value should be in the end.”
Greene advocates working with students starting in high school to help the student understands from an early age what field they wish to have a career in so Greene and his team at College liftoff can ensure the student can access what the value of their desired career path should be.
“If students can understand what their career path is, and do that more thoroughly early on, you can actually determine what that value is going to be,” Greene said. “We do it all of the time.”
Greene said the student loan debt crisis has a historical pretext as well. The stock market crash in 2008 led to a massive downturn in the American economy that resulted in the loan debt issues many American students are experiencing today. Greene said in an attempt to navigate a difficult labor market, many professionals enrolled in various educational institutions to get degrees that were later deemed worthless in many job capacities.
“In this downturn, we saw a real heavy spike in educational costs because people were flocking to education thinking it would solve their job status,” Greene said. “A lot of the degrees people were getting at that time didn’t make any sense because people did not know what they were and how to evaluate what they were really worth. This left people with more degrees out there that flooded the market with more debt.”
Greene said he has had personal experience with student debt and made it his personal ambition to figure out how to attain his college degree while not taking on extreme student debt. His personal experience became his motivation to start College Liftoff and help guide other families into making smart decisions concerning their college education and financial situation.
Greene was determined to figure out a way to pay for college by his own means without relying on his mother’s help as he wanted to pay her back for singlehandedly raising him in Cincinnati. He gained acceptance into his dream school, which was Northwestern University at the time, to study engineering. Although Greene received $15,000 a year to attend Northwestern and reduced his total bill to $25,000 a year after taking out some student loans, he knew it would be a tremendous burden.
Greene calculated the Northwestern rates for four years and realized if he decided to attend Northwestern, he was going to finish his undergraduate studies with over $100,000 in student loan debt. Greene eventually decided to attend Ohio State University, his third choice at the time, where he received a full-tuition scholarship to study engineering.
While he attended Ohio State, he worked in the computer lab on campus and as a resident assistant, so the additional costs of room and board were paid off while he gained extra spending money. He also worked engineering internships every summer, where he earned around 6 to 8 grand to save up. Greene eventually graduated from Ohio State University with no debt and a surplus of $40,000 at his disposal.
After he graduated and began his professional career in mechanical engineering, colleagues began asking him questions about college and how to save money while their children set out to pursue their degrees.
“That is where my passion comes into this and why I see we have to really focus on the solution for it,” Greene said.
Greene said taking the time to develop a more personalized approach will help students figure out the best plan to begin and conclude their college studies in the best possible financial condition.
“You have to evaluate education on multiple metrics and use measurables in order to understand what you are buying and hold universities accountable to those measurables,” Greene said. “It takes working one on one with a student to figure that out.”
Words by: Tyler Haughn
Infographic by: Tyler Haughn
Featured image by: Tyler Haughn
Portrait photograph of Aaron Greene by: Tyler Haughn
Matthew Fout, Aaron Greene, Stephen Howell and Brian Duchon interviews completed by: Tyler Haughn
Mark Evans interview by: Morgan Dunlop
Video by: Morgan Dunlop
