As federal lawmakers weigh options to reduce student loan debt, including debt forgiveness and zero interest loans, the number of Connecticut students who receive 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 loan amount borrowed by 2015-16 undergraduates 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 recipients.
Associate degree graduates who attended public institutions had a cumulative loan amount of $16,900, while graduates of private nonprofit schools owed $26,800, and those who attended a private for-profit school took out loans totaling $28,500.
Among bachelor’s degree graduates, public school cumulative loan averages were $29,100, increasing to $34,400 and $44,600 for private nonprofit institutions and private for-profit schools, respectively.
Nationally, 68% of 2015-16 graduates with bachelor’s degrees borrowed an average of $30,800, and the average amount owed compared to the 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 from colleges and universities around the country.
Nationally, there are roughly 45 million people with student loans totaling about $1.6 trillion in debt.
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 financial aid opportunities as a sophomore, and “med-school was out of the question,” she said, but added that she still wanted to pursue a career helping others, and earned a master’s in public health.
While in graduate school, Moreau took out more student loans than she needed in order to pay off personal loans with higher interest rates, and went into a profession where after 10 years of non-profit work her federal student loans would be forgiven.
She graduated college with $120,000 in student loans, she said, adding that she is now working about 65 hours a week in two jobs to support herself.
Moreau said she is expecting to have her federal student loans paid off by 2029 and personal student loans paid off by 2033.
“My experience with student loans has been entirely 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 exploded.”
Meanwhile, as graduates drown in student loan debt, enrollment is dropping in Connecticut higher education institutions, so fewer people are getting student loans through the state.
Full-time equivalent enrollment at the University of Connecticut has held steady over the past decade, but overall enrollment and full-time equivalent students in the state university system has dropped from 29,225 to 24,735 since 2012, according to the state Office of Higher Education.
Community college full-time equivalent enrollment has also declined over the same time period, mostly among men as their numbers have gone from 42.5% of students to 39.9% in the last 10 years.
However, the minority population in Connecticut colleges and universities has increased from 27.1% to 38.3% for the same time period — an increase greater than the general population when compared to the previous two censuses.
A study conducted by The Brookings Institution showed that Black households nationwide carry more student debt than whites, leading to lower credit scores.
This then leads to Black people with a college degree having lower homeownership rates than white high school dropouts, according to the study, which also notes that nearly three-quarters of Black student loan borrowers have a higher balance now than they did when they initially took out their loans.
Adding to the need for student aid is the rise in tuition and fees, as the average cost to attend UConn has gone up from $10,416 to $17,226 over the past decade — a 65.4% increase, not including room and board.
Average tuition and fees at other state universities and community colleges have also increased by about $3,300 and $1,100, respectively.
But while tuition has gone up, traditional funding sources have gone down.
The Roberta B. Willis Scholarship Program, the state’s primary financial aid program for eligible Connecticut residents enrolled as undergraduates, has seen a drop in funding, as well as a decline in recipients.
The average amount given to recipients in recent years has increased slightly, however.
Since fiscal year 2016, no first-year students who were eligible for the “need-merit” scholarship portion of the program — the one that provides aid to the state’s neediest and brightest students — were awarded aid “due to lack of funding” of the program, according to an OHE report.
Starting with the 2017 fiscal year, legislation limited the scholarship’s need-merit portion to 30% of the entire scholarship’s funding, leading to a decline in aid for prospective students who were eligible for financial aid based solely on their inability to pay. Total aid provided and the number of recipients dropped as a result, with the number of recipients declining from 14,900 in 2016 to 8,400 in 2020
So in effect, students who are bright enough to earn a scholarship still could not afford to make up the difference in the cost of a college education without taking out substantial loans.
The increased costs to students come despite a massive increase in endowments of public institutions, which have more than doubled in the past 10 years, growing by 108.5%.
Taxpayer dollars in the form of state appropriations have remained relatively steady since 2012, increasing from $554.2 million to $673.4 million over the past decade.
UConn’s current taxpayer subsidy represents 27.5% of its total revenue, which is still less than any percentage of funding provided to institutions in the Connecticut State Colleges and Universities system or community colleges, according to the Office of Higher Education.
Loan forgiveness or no interest
Lawmakers in Washington, D.C., are debating several proposals to provide some relief to those with existing, and future, student loans.
President Joe Biden has floated several ideas, including forgiving $10,000 per federal student loan borrower who earns less than $150,000, or married couples filing jointly who earn less than $300,000.
Biden has also proposed canceling $50,000 per borrower, a concept supported by U.S. Senate Majority Leader Chuck Schumer, D-NY, and U.S. Sen. Elizabeth Warren, D-Mass.
Forgiving $50,000 of debt would eliminate the loans of 36 million people, according to Forbes, but it is not yet clear whether the president has the power to make such a move unilaterally.
U.S. Rep. 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 cut student loan interest rates by close to half, “these rates are climbing again” based on the calculation used under the law.
“This issue screams out for continued focus,” Courtney said this week, noting that all interest from federal student loans goes directly to the U.S. Department of the Treasury.
The financial “windfall for the government,” Courtney said, contradicts the “logical public policy” of encouraging people to further their education after high school, as “society benefits from them getting an education.”
Currently, if a student were to graduate from college and work a lower income job, they can qualify for lower monthly payments based on their income. But often they end up owing more in interest than they do on the principle loan.
“That’s where it gets sinister where people are getting trapped financially,” Courtney said.
His zero-interest solution would save the average current borrower about $575 each year in interest and protect them from increased rates from missed payments or a forbearance due to an illness or job layoff.
Aside from assisting those with existing loans, Courtney’s proposal would also benefit future graduates, which loan forgiveness proposals would not.
Courtney noted that borrowers could have been paying off their loans without interest since a freeze on federal student loan payments 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 because of an illness like COVID-19.
The payment pause is extended through Aug. 31, and it is not yet known if the Biden administration will extend it again.
If the payment moratorium is not extended, all existing interest rates will be back, which will be “a heavy burden for borrowers,” Courtney said.