GARDNER – With the May 1 deadline for the Free Application for Federal Student Aid (FAFSA) fast approaching, student loans are again at the forefront of national discussion as college graduates leave school under an unprecedented burden of debt.
Last week, U.S. Sen. Elizabeth Warren, D-Mass., and U.S. Rep. Elijah Cummings, D-Md., continued her Middle Class Prosperity Project tour at UMass Boston by holding a forum focusing on student loans and college affordability. “For generations, a college degree was a ticket to the middle class,” Sen. Warren remarked.
In today’s economy, she noted, the gap between those with and without four-year degrees has only grown larger, as students with bachelor’s degrees earn 98 percent more in their lifetime. While the nation’s economy becomes more and more dependent on those with college degrees, tuition has skyrocketed, pricing out many Americans who, just a generation ago, would have had far less trouble financing their education.
“A student going to a public college today, adjusted for inflation, pays 300 percent more than 30 years ago,” she said. At the same time, salaries and standard of living have not adequately adjusted to meet this new demand, forcing families to take out loans to make up the difference. Sen. Warren said more than 40 million people have taken out loans to finance their college education, owing a collective $1.3 trillion, with the majority of that amount sitting on the shoulders of younger Americans.
“Student debt is keeping young people from buying homes and buying cars and making the purchases that will drive the economy,” the senator said during last week’s forum.
As students lose financial ground, Sen. Warren said, the government has been “raking in” billions in profits off federally backed student loans by keeping interest rates inflated, with loans issued during this fiscal year sitting at about 4.66 percent. At that rate, Sen. Warren said the government is in line to make about $66 billion in profits in one year alone.
“The government is making fat profits off the backs of kids trying to get an education,” she said. “This is obscene and it needs to stop.”
The effects can be seen in college enrollment numbers, which have trended down over the last several years as education without the promise of a full-time job after graduation has become an increasingly risky investment. According to a report released by the National Student Clearinghouse Research Center, which covers up to spring 2014, college enrollment has been on the decline since the 2010-2011 academic year, particularly among adults 24 and older who in the current economy are unlikely to give up a job to continue their education.
This trend particularly affects community colleges, where a 2.7 percent dip in enrollment occurred between spring 2013 and spring 2014. Mount Wachusett Community College Director of Financial Aid Kelly Morrissey said students are examining the financial implications of college more closely than ever, with many basing their application and enrollment decisions on the amount of debt they will have at the end of a two- or four-year program.
“Students and families are being very mindful as they balance the cost of their education and available resources,” she said. While students attending a four-year public or nonprofit college can expect to graduate with $28,000 to $30,000 in student loan debt, Ms. Morrissey said many students at the Mount start their college careers at the community level to better manage their debt load and minimize the amount of loans they may require — an endeavor the school strives to support.
“MWCC has many pathways in place to allow students to continue on to finish their baccalaureate degree, including several 3+1 partnerships and the statewide MassTransfer agreement,” she said. “We also offer free financial literacy programs that will allow students to keep track of their personal finances and be deliberate in their intentions to borrow the least possible amount while completing their education.”
Ms. Morrissey said it is critical that students and their families fill out the FAFSA forms, even if they think they may not qualify for financial aid. “Students in need of financial support to fund their education are often amazed to find that the availability of federal and state grant assistance, combined with generous amounts of institutional grant aid, allows them to attend a community college without relying on borrowing,” Ms. Morrissey said.
On Capitol Hill, Sen. Warren has introduced legislation that will reduce interest rates on outstanding loans, both federal and private — a move she said will save many hundreds, even thousands, of dollars a year. “I grew up in an America that was investing in the future, an America that was investing in its kids,” she told the crowd at UMass Boston.
“We cannot turn away from that America. We have to build those opportunities again.”
The Gardner News, Eryn Dion
April 10, 2015