Ohio

Eye on Education

As Loan Debt Rises, Colleges Encourage Students to Graduate On Time

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In 2012, college graduates in Ohio walked away with an average of about $29,037 of student loan debt.

That puts Ohio ninth in the country for the average amount of student debt, according to a recent study from The Institute for College Access and Success.

Nationwide, average student loan debt has increased about six percent each year since 2008, according to TICAS. And data from the Federal Reserve Bank of New York show student loan debt is the largest form of consumer loan debt outside of mortgages.

As the figure grows, many colleges are trying to find ways to reduce that loan debt, steer students toward careers to help them pay that money back, and nudge them to graduate more quickly.

As the Akron Beacon Journal reported last month, the University of Akron is piloting a program to ensure students with less than 48 credit hours meet with an advisor at least three times and have selected a major to ensure they graduate on time.

And as the Plain Dealer reported, Cuyahoga Community College is encouraging students to finish on time by offering a three year tuition guarantee to students who stay enrolled full time and meet all of their program requirements.

State officials say they’re doing their part by changing to a performance based funding system for colleges, tying schools’ funding to the percentage of students who graduate, not the percentage of students enrolled.

And a committee of lawmakers is considering a policy that would set 15 as the standard default number of hours for full time enrollment to help reduce student costs.

Still, as colleges and state officials undertake these efforts, some experts disagree as to how much loan debt is too much.

“There’s no perfect measure,” says Lauren Asher, president of TICAS.  An affordable debt level, she says, depends on the type of career students plan to go into after college, and what type of salary they’ll be making.

“If borrowing is the only way you’re going to get through college, it may be a worthwhile investment,” she says.  She adds that it may be cheaper for students to borrow in the short term and go to school full time rather than work and attend part-time, delaying their path to graduation.

Research shows many young adults aren’t deterred by the prospect of taking on loan debt.

A 2011 study from researchers at Ohio State University found young adults find value in having some educational debt, and that having such debt does not negatively impact their self-esteem.

“Access to debt is one way that people have gotten access to college,” says Rachel Dwyer, one of the authors on the study.  And Dwyer says in a system where loans are a major source for financing higher education, some amount of educational debt is inevitable.

Still, both Asher and Dwyer caution, the existing data on how much student debt graduates hold are incomplete.  Colleges aren’t required to report the average debt among their graduates, and for-profit schools are less likely to divulge debt information than their public, non-profit counterparts.

Asher says what matters most is that students calculate the net costs of different colleges, and then do the math for their own financial situation.

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