The budget problem
In 2000, there was $200 billion of student debt in the United States — now there is $1.3 trillion.
Natalia Abrams, executive director of Student Debt Crisis, a nonprofit that advocates for student debt resolution, said the 2008 recession caused states to reduce investments in public universities, increasing tuition costs.
North Carolina cut funding and has not recovered its per student expenditure as quickly as other states, said Eric Johnson, spokesperson for UNC’s financial aid office.
“Colleges are one of the easiest places to cut in a state budget because they have the alternative revenue source,” he said.
He said balancing a state budget presents a difficult set of choices for the General Assembly, particularly because taxation of any kind is considered off the table, and tuition cannot close the gap by itself.
“The tuition differences have not come anywhere close to making up for the state budgets cuts, but it does mean that as a state legislature, this is an easier kind of pain to inflict than any other choices,” he said.
For the 2016-17 school year, total projected cost of attendanceat UNC for in-state students will be $24,898, compared to $51,466 for out-of-state students.
Jenna Robinson, president of the Pope Center for Higher Education Policy, said out-of-state students cover the entire cost of their education, whereas in-state students are covered in part by the N.C. General Assembly.
But out-of-state students can receive full financial aid — a rarity for a University with the size and reputation of UNC— and are also eligible for programs like Carolina Covenant, Johnson said.
“It is just true that for out-of-state students, because the tuition is so much higher, there are going to be circumstances where you are going to be assigned a greater amount of loans that a comparable in-state student wouldn’t get because of the tuition differential,” he said.
And in-state students’ cost of attendance is heavily subsidized, he said.
“The important thing for in-state students to remember is that your tuition, as significant as it looks and as significant as it is, is actually the tip of a much larger iceberg of what it costs to educate you at UNC-Chapel Hill,” Johnson said.
Robinson said within the UNC system, student debt is not exceptionally high because students who borrow money and graduate are able to pay it off.
“Where it starts to get problematic is when students get into school, accrue debt and then don’t graduate,” she said.
HBCUs and debt
Historically black colleges and universities in North Carolina have graduation rates that range from 32.2 to 45.5 percent, according to a report by the Wall Street Journal — less than the system average of 54.6 percent, excluding North Carolina School of Science and Math.
Marybeth Gasman, director of the University of Pennsylvania’s Center for Minority-Serving Institutions, said HBCUs’ student populations are mostly low income and minority students, who experience unique stressors that reduce graduation rates.
Robinson said more students at HBCUs default on their loans than students at other UNC-system schools.
“The result for those students is very serious because they don’t have a degree, they don’t even have a two-year degree or a certificate or anything to show for what they did in the time they did spend in college,” she said.
There have been ongoing efforts to curb the loan default rates at HBCUs, Gasman said.
Across most states, HBCUs do not receive equitable per student funding, which can prevent the institution from providing institutional aid, she said.
“North Carolina has higher funding levels than most states, but when you look at the per student funding at HBCUs it’s still nearly half of what the funding is at UNC-Chapel Hill or N.C. State,” Gasman said.
She said these discrepancies are problematic.
“There has never been a point where the black institutions have been given enough resources to come to the same level as the white institutions,” she said.
Finding a solution
Attempts to solve student debt must address both sides of the equation — college affordability and assisting those currently in debt, Abrams said
“Even if we made college free tomorrow, it still wouldn’t do anything for those 43 million borrowers in debt,” she said.
Abrams said student debt concerns mass audiences because it addresses the nation’s economy and workforce.
“It’s a multi-generational issue, so you’re not just talking to 20-somethings; you’re talking to them and their parents,” she said.
There is a long road ahead, but Abrams said she is hopeful.
“By both sides talking about it, it’s proving that this should be and is a non-partisan issue — student debt doesn’t discriminate whether you’re a Republican or a Democrat,” she said.
Johnson said though students should be worried about debt, they shouldn’t fear it.
“There is good student debt and there is bad student debt,” he said. “We need to get better at distinguishing the two, otherwise we are going to block certain people out of opportunity because they’re going to have the sense that student debt is a ruinous thing and it mostly is not.”
He said debt at well-regarded universities is a good investment for students — and Fernandez agrees.
The Covenant scholar said he is interested in pursuing a master’s degree in public health and would consider using student loans to pay for it.
“I don’t think it’s necessarily a bad thing because it’s investing in something that can make you more money in the future,” he said.
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