Last week UCO students and faculty gathered to discuss a topic with a lot of weight—literally and figuratively—in current affairs: the problem of student debt.
A panel of students and experts, including professors Lisa Overman and Dwight Sulc and UCOSA president Matt Blubaugh, held forth on the issue. The panel formulated ways in which students could educate themselves and even work the system in their favor.
Overman began the discussion by addressing some of the hard numbers on student debt, according to the Federal Reserve of New York.
“The amount of loans taken out by students last year totaled $100 billion,” she said. “This was the first time it hit that amount, and the total amount of outstanding student debt passed $1 trillion in 2011.”
Overman told the audience that out of 320,000 student borrowers who had entered into a repayment period in 2009, 10 percent were forced to default—that is, 10 percent of student borrowers failed to pay back the loan.
“Defaulting on student loans actually circumscribes a person’s life,” Overman said. “These loans are literally a form of indenture—the loans are secured not by property, but by the person, and so there are very few loans in which a person can actually get rid of through bankruptcy.”
Panelist Drew Duke, executive director of UCO’s Student Financial Services, said that in 2010, UCO students had $58 million taken out in loans.
By Duke’s summation, the situation is getting “worse:” new limits on the number of semesters that students can receive Pell Grants and new regulations associated with scholarship and state grant programs based on grades.
“As there are more of those conditions or qualifications of grant and scholarships, the only other option for a student to continue to go to school currently is to replace that with loans,” Duke said.
Political Science senior Sierra Maddox and graduate student Rusty Olson both had helpful tips to attempt to avoid the student debt mire.
According to Olson, staying educated is paramount.
“Think about what you need to do after you get your degree,” he said.
Maddox had some practical solutions for doing just that.
“Avoid loans altogether,” she said. “Try to get scholarships. There’s FAFSA, there’s the Pell Grant.”
Also: choose a school based on price, not prestige; apply for subsidized federal loans; repay as much as possible as quickly as possible; apply for loan forgiveness; make sure all options are off the table before considering defaulting on the loan; and try to get into nonprofit groups like the Peace Corps and AmeriCorps.
Sulc had a different attitude towards the problem of student debt.
“The student debt crisis is a massive issue, but it is a flea on an elephant’s back,” he said. “What we are really dealing with here is much bigger and much older; we’re talking about a monetary system that is debt-based. If we take a look at the comparative financial systems of different countries, we can take a look around and we need to ask ourselves why is it that Canada is not having a banking crisis? Why is it that Canada has passed a law to set a ceiling on university tuition, and why is it that the laws in this country include no such thing?”
Sulc gave an overview of why what he calls the student debt “bubble” is happening: a reduction of state and federal appropriations; Congress occasionally raising student loan limits; and a recent change in federal law removing all standard consumer protections.
“We’ve weakened truth in lending, bankruptcy proceedings, the statute of limitations, the right to refinance, the adherence to usury laws, fair debt and collection practices, which effectively strip students of the ability to declare bankruptcy in this particular area,” he said.
The panel came up with a couple of recommendations to assuage the problem of student debt, including a moratorium on loan repayments and even just a broad shift in thinking, a transition to the idea that higher education is not a privilege, but a right.