Student loan debt
Ways to alleviate burden proposed
by LESLIE HELCAMP
Sep 13, 2012 | 1046 views | 0 0 comments | 7 7 recommendations | email to a friend | print
As Texas college students enter their third week of classes, many of the back-to-school jitters are fading. They have chosen their classes, are getting to know their instructors and classmates, and are settling into study schedules and campus life. But for a substantial number of college students, one persistent anxiety remains — how to make ends meet with less grant aid and a much higher loan burden than their peers just five years ago.

As the Senate Higher Education Committee meets this week, our state legislators have the opportunity to combat the student loan crisis by declaring a statewide goal to reduce student loan dependence. Increasing investments in grant aid and work-study to alleviate the student loan burden will further promote college attendance and completion. Other strategies to improve student success include encouraging student loan counseling, financial education, and early financial preparation, including encouraging participation in matched college savings accounts through programs offered by the Texas Match the Promise Foundation.

Texas college students, like the rest of the country, are racking up college debt. Nationally, combined student loan debt has surpassed the $1 trillion mark, outpacing credit card debt. With decreases in state financial grant aid, students are relying more on loans and off-campus work to cover their college expenses, forcing them to take fewer classes so they can work more hours, slowing time to graduation, and leaving many students with insufficient income to cover these obligations. While student loans can provide a pathway to graduation, too much loan dependence can lead to unmanageable debt.

More and more students and their families are shouldering the cost of college on their own, and this cost shift is coming at a time when Texas is attempting to strengthen the educational pipeline of opportunity to create the workforce and economy of the future. A more college-educated workforce increases economic vitality through higher personal incomes, a broader tax base, less reliance on public assistance, lower unemployment rates, lower crime rates, and better overall community well-being and opportunity. A college degree or credential can chart a career pathway that provides job security, a competitive edge in the job market, a middle-class income, and the opportunity to build assets that promote financial security.

For Texas, this challenge is especially important given the sharp rise in our child population over the last decade. And now nearly two-thirds of kids in Texas public schools are low-income or economically disadvantaged. Because these future college students will have fewer resources to pay for college, financial need will continue to grow.

Policymakers in Texas like to tout low tuition at Texas community colleges as the best financial aid program in Texas, yet community college students living near or below the poverty level still face a shortage of between $3,000 and $5,400 annually to pay for the total cost of attendance. These figures are even higher for students at four-year institutions. And our student loan default rates are soaring. Of those students at Texas’ public 2-year institutions who entered loan repayment in 2008, 19.6 percent defaulted within three years. Borrowers at 4-year public institutions fare better, but the rate is still too high at 9.2 percent.

Our state policymakers must live up to the promise of improving Texas’ college access and completion rates through adequate financial aid investments for low-income students. In the state’s higher education plan, Closing the Gaps by 2015, financial aid is included as a major strategy to close college enrollment gaps by providing “grants and scholarships to cover tuition, fees, and books for every student with financial need…” Yet progress is lagging, especially in participation among African American males and Hispanics. And state grants fail to serve all low-income students with financial need—half of eligible students do not receive a TEXAS Grant, our state’s largest grant aid source, because of recent budget cuts to an already underfunded system.

Texas has much to lose if we continue to deny the many aspiring and current college students the educational lifeline that grant aid provides. Shifting a larger share of the financial burden of paying for college to low-income students and families in the form of loan dependence will leave many college students struggling to make ends meet and saddled with debt. Texas can lead the country in tackling the student loan crisis with enhanced investment in grant aid, early financial preparation, and encouraging college savings.

Leslie Helmcamp is an economic opportunity policy analyst at the Center for Public Policy Priorities. Her work is part of OpportunityTexas, a project to move more Texas families toward greater economic opportunity through academic and financial education and savings.
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