As tuition fees continue to rise, IC students take on more debt
After the Ithaca College Board of Trustees raised the price of tuition by 3.25% for the 2022-2023 school year, sophomore Bianca Sessegolo called it and decided to transfer to the ‘Rutgers University, where she will save money compared to what she pays at Ithaca University.
“[At Ithaca College], I pay almost entirely in loans in my name or in the name of my parents,” Sessegolo said. “Especially since I’m a first-generation student going into college, we didn’t know how to do anything or how it works, especially in this country…I don’t know anyone who isn’t at least a bit concerned about their financial future.
Of the college’s annual tuition of $65,527, $46,610 is for tuition. Although college tuition is $8,425 above average $38,185 price tag for US private colleges, the problem is not unique to the college. America is now the most expensive place to go to college on the planetAmericans now carrying a collective dollar1.86 trillion in student debt.
During the 2020 presidential election cycle, candidates Bernie Sanders and Elizabeth Warren popularized the idea of federal student loan debt forgiveness. Joe Biden, then candidate joined Sanders and Warren in pledging to erase $50,000 in debt for students from families earning less than $125,000 and $10,000 for all students.
Six figures in debt and three months from graduation, senior Will Hugonnet recalls when Biden – his favorite presidential candidate – make this promise during the election campaign. More than a year into his presidency, Biden has yet to fulfill that pledge and has publicly refused to rescind the pledged amount.
“If they [the Biden administration] can just spend so much money on other things like the military, why can’t they take some of it and put it back into funding education? said Hugonnet.
The budget of the Ministry of Defense is $715 billionwhile the budget of the Ministry of Education is $73.5 billion.
Under the Higher Education Act, Biden has the ability to cancel student debt through an executive order, which would not require congressional action. Biden has already used his executive powers to extend the pause on student loan repayments that began under former President Donald Trump in response to the economic fallout from the COVID-19 pandemic. Canceling student debt could create up to 1.5 million new jobs, reduce unemployment and increase economic opportunity, according to EducationData.org.
“This [student debt] is a big stressor,” Hugonnet said. “I don’t know how else to put it. … Some days you wake up and think about it, but you can’t do anything because if you don’t get that money, you can’t come here. It’s a Catch-22 kind of thing where you’re damned if you do but you’re damned if you don’t.
William Kolberg, an associate professor in the Department of Economics, said one of the reasons the cost of college has risen so significantly for American students in recent years is that college administrations increased spending to create new programs, buildings and services that attract future students. Kolberg said that in college, some of these services — like information technology and the Psychiatric Counseling and Services Center — provide benefits to students, but significantly increase expense levels.
A report by the American Council for Trustees and Alumni found that spending on student services at private colleges increased by 32% between 2010 and 2018, which is higher than increases in administration and teaching spending for the same period.
“They look around and see these other schools that have all of this,” Kolberg said. “They fear that the students will go to another school. It’s a bit like an arms race. Every college needs to muscle up because they care about each other [colleges] to build up muscle. »
While 92% of college students receive some form of financial aid, its endowment — which generates income for college financial aid — is declining. A 2021 audit of US and Canadian institution endowments by the National Association of College and University Business Officers revealed that between fiscal year 2019 and 2020, Ithaca College’s endowment increased from $347 million to $337 million, a loss of 2.91%. The audit found that other small New York colleges like Potsdam, Clarkson University, and Alfred University had endowment declines between 1 and 5 percent.
Junior Adam Coe said he was only able to attend college because of scholarships and financial assistance. For the past three years, he has had to take out loans every year and is share tuition and accommodation costs with their parents.
“I’m in debt like most college students, luckily I’m not in too much debt,” Coe said. “I couldn’t afford school without my scholarships and the financial aid I received.”
The tuition increase for the college was approved at an October 2021 Board meeting. After the meeting, the Board released an intercom station explaining the increase.
“These increases and those of recent years have been conservative within our comparative set of schools, while maintaining the investments in human and capital resources necessary to ensure that our students have the best possible learning environment,” said the Publish read.
Kolberg said potential solutions to the student debt crisis, besides debt cancellation, could be to cap interest rates on student loans. Depending on the level of study, Ministry of Education student loans have interest rates of 3.73–6.28% at a fixed rate. This means that the interest rate of the loan remains at the same rate throughout the repayment term.
However, some students like Hugonnet must take out private student loans, which have variable rates. This means that the loan interest rate may change throughout the repayment. The average interest rate on private student loans can be between 0.94 – 11.98%, depending on the lending company and the borrower’s credit score. Loans with a high risk of repayment failure are called subprime loans, which are usually distributed by private lenders. This can put students with lower credit scores at risk of predatory lending, as subprime loans are harder to repay.
“You have to be careful of predatory companies that are going to try to take advantage of this situation,” Kolberg said. “These are the ones who are going to say ‘Oh, you couldn’t get a loan anywhere else? I can give you a loan. Then you look at the interest rate and it’s crazy. Interest needs to be put in place to protect students in a pretty scary market.
Buried deep in college Student Financial Services website, three private student loan companies are recommended for students – Citizens Bank, Discover and Sally Mae. These three companies made deals with the US government after using illegal banking practices such as fraud and predatory lending. Sallie Mae’s loan servicing operation is handled by Navient, one of America’s most profitable private student loan companies. In one January 2022 RegulationsNavient canceled $1.9 billion in student loans after it was alleged the company intentionally lent subprime loans it knew would fail to American students.
Matthew Ford, senior corporate communications specialist for Navient, said the company denies wrongdoing and has long advocated changing the student loan system.
“We have offered many options to student borrowers during the pandemic,” Ford said by email. “Navient recently announced an agreement with a number of state attorneys general to resolve the legal issues. We have expressly denied violating any law, including consumer protection laws, or causing harm to the borrower.
Although preyed upon by private student loan companies, most college students who take out loans do so through the Ministry of Education Loans Department. While Biden has reduced and canceled some outstanding student loans that are owed, students like Hugonnet will be buried in public and private debt after graduation.
“It’s really stressful,” Hugonnet said. “I don’t like to think about it…I know you can put it off until you work, so I think I have another year before I have to start. [paying]. But it’s daunting because you get out of school and get a very basic entry-level job that doesn’t pay that much.
Staff writer Jadyn Davis contributed reporting.