After Graduation Comes Student Loan Debt | Connecticut and area

As federal lawmakers weigh options for reducing student loan debt, including debt forgiveness and zero-interest loans, the number of Connecticut students receiving student loans has steadily declined over the past decade, but their debt remains stagnant.

According to the National Center for Education Statistics, the average cumulative amount of loans borrowed by undergraduate students from 2015-2016 across the country was $16,800 for those who earned a certificate; $20,000 for an associate degree; and $32,300 for bachelor’s degree holders.

Associate degree graduates who attended public institutions had a cumulative loan amount of $16,900, while graduates from private nonprofit schools owed $26,800 and those who attended a private nonprofit school profit took out loans totaling $28,500.

Among baccalaureate graduates, the cumulative loan averages from public schools were $29,100, rising to $34,400 and $44,600 for private nonprofit institutions and private for-profit schools, respectively.

Nationally, 68% of 2015-2016 graduates with bachelor’s degrees borrowed an average of $30,800, and the average amount owed versus amount borrowed was 91.7%, according to the National Center for Education. Statistics, a federal agency that collects, analyzes, and publishes financial and statistical data about colleges and universities nationwide.

Nationally, about 45 million people have student loans totaling about $1.6 trillion in debt.

Bolton’s Amanda Moreau holds her degree after graduating from Southern Connecticut State University in 2018 and earning her master’s degree. She graduated with $120,000 in student loans, she said, adding that she now works about 65 hours a week at two jobs to support herself.

One such borrower is Bolton High School graduate Amanda Moreau, 28, who was one of the first members of her family to go to college and felt becoming a doctor would “pay off in the end. “.

However, after transferring schools after her freshman year in college, she had fewer opportunities for financial aid in her second year, and “med school was out of the question,” she said, but added that she always wanted to pursue a career helping others, and earned a master’s degree in public health.

While in college, Moreau took out more student loans than she needed to pay off personal loans with higher interest rates, and embarked on a profession where, after 10 years of working at nonprofit, its federal student loans would be forgiven.

She graduated from college with $120,000 in student loans, she said, adding that she now works about 65 hours a week at two jobs to support herself.

Moreau said she expects her federal student loans to be repaid by 2029 and her personal student loans repaid by 2033.

“My experience with student loans is completely on my shoulders,” she said, adding that she had trouble finding a house because of her debt, but was able to get a mortgage” before the housing market explodes”.

Meanwhile, as graduates are saddled with student loan debt, enrollment is declining at Connecticut’s colleges, so fewer people are getting student loans through the state.

Full-time equivalent enrollment at the University of Connecticut has remained flat over the past decade, but total enrollment and full-time equivalent students in the state university system have fallen from 29,225 to 24,735 since 2012, according to the State Office of Higher Education.

Full-time equivalent enrollment in community colleges has also declined over the same period, mostly among men, dropping from 42.5% of students to 39.9% over the past 10 years.

However, the minority population in colleges and universities in Connecticut increased from 27.1% to 38.3% for the same period – an increase greater than the general population from the previous two censuses.

A study by the Brookings Institution showed that black households nationwide have more student debt than whites, leading to lower credit scores.

This then leads black college-educated people to have lower homeownership rates than white high school dropouts, according to the study, which also notes that nearly three-quarters of black student borrowers have a balance. higher now than when they originally took out their loans.

Rising tuition and fees add to the need for student aid, as the average cost to attend UConn has risen from $10,416 to $17,226 over the past decade, an increase 65.4%, not including accommodation and meals.

Tuition and average fees at other state universities and community colleges also increased by about $3,300 and $1,100, respectively.

But as tuition fees have risen, traditional sources of funding have shrunk.

The Roberta B. Willis Scholarship Program, the state’s main financial aid program for eligible Connecticut residents enrolled as undergraduate students, has seen a decline in funding, as well as a decrease in the number of beneficiaries.

The average amount paid to beneficiaries in recent years has, however, increased slightly.

As of fiscal year 2016, no freshman eligible for the “need-merit” portion of the program — the one that provides aid to the state’s neediest and brightest students — has received aid.” due to lack of funding” for the program, according to a report from the HEO.

Beginning in FY 2017, legislation limited the need-merit portion of the scholarship to 30% of all scholarship funding, resulting in lower aid for prospective students who were eligible for aid. financially solely because of their inability to pay. The total assistance provided and the number of beneficiaries have decreased accordingly, with the number of beneficiaries increasing from 14,900 in 2016 to 8,400 in 2020

So, in effect, students bright enough to win a scholarship still could not afford to make up the difference in the cost of a college education without taking out substantial loans.

The increase in costs for students comes despite a massive increase in public institution endowments, which have more than doubled over the past 10 years, increasing by 108.5%.

Taxpayers’ money in the form of state appropriations has remained relatively stable since 2012, rising from $554.2 million to $673.4 million over the past decade.

UConn’s current taxpayer subsidy is 27.5% of its total revenue, which is still less than any percentage of funding given to institutions in the Connecticut State Colleges and Universities system or to community colleges, according to the Office of Higher Education.

Loan repayment or no interest

Lawmakers in Washington, DC, are debating several proposals aimed at providing relief to those with existing and future student loans.

President Joe Biden has floated several ideas, including pardoning $10,000 per federal student borrower who earns less than $150,000, or married couples filing jointly who earn less than $300,000.

Biden also proposed waiving $50,000 per borrower, a concept backed by U.S. Senate Majority Leader Chuck Schumer, D-NY, and U.S. Senator Elizabeth Warren, D-Mass.

Forbes says canceling $50,000 in debt would eliminate loans for 36 million people, but it’s not yet clear whether the president has the power to make such a move unilaterally.

U.S. Representative Joseph D. Courtney, D-Conn, is proposing a bill that would implement zero interest for federal student loans.

He noted that despite a bipartisan bill signed into law by President Barrack Obama in 2013 that nearly halved student loan interest rates, “those rates are climbing again” based on the calculation used. under the law.

“This issue requires continued attention,” Courtney said this week, noting that all federal student loan interest goes directly to the US Treasury Department.

The “financial windfall for government,” Courtney said, contradicts the “logical public policy” of encouraging people to continue their education after high school because “society benefits from their education.”

Currently, if a student were to graduate from college and work in a low-income job, they may qualify for lower monthly payments based on their income. But often they end up owing more interest than on the main loan.

“This is where it gets grim where people are financially trapped,” Courtney said.

Its zero-rate solution would save the average current borrower about $575 a year in interest and protect against rate increases due to missed payments or forbearance due to illness or death. a layoff.

In addition to helping those with existing loans, Courtney’s proposal would also benefit future graduates, which loan forgiveness proposals would not.

Courtney noted that borrowers could have paid off their loans interest-free since a federal student loan payment freeze was put in place in April 2020 due to the COVID-19 pandemic. He added, however, that not all borrowers could afford to do so as they may have been laid off during the shutdown or missed work due to an illness like COVID-19.

The payment break is extended until August 31 and it is not yet known whether the Biden administration will extend it again.

If the payment moratorium is not extended, all existing interest rates will return, which will be “a heavy burden on borrowers,” Courtney said.

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