Student loan debt and its impact on students, families and the economy brought lawmakers and students together for two days of discussion in St. Peter and Mankato.
“It’s a topic near and dear to a Gustie’s heart,” said Adrienne Gruenes, a Gustavus Adolphus College student who helped organize the Feb. 23 evening discussion in St. Peter along with the College Democrats.
Minnesota graduates carry an average student loan debt load of over $31,000 – the fifth highest in the nation, according to the North Star Policy Institute, which sponsored both events. And almost 1 million Minnesotans combined have over $20 billion in student loan debt, part of the $1.3 trillion total in the United States.
That burden translates to monthly payments as high as $500 to $750 a month, students reported, nearly as large as a potential mortgage payment. And with interest rates as high as 8 percent, students at both discussions voiced similar frustrations. While the federal loan programs often are easy to access, students admitted to shock and surprise to the student loan totals as graduation and entering the workforce loomed.
Students offered individual debt loads exceeding $70,000 and $80,000. For students continuing on to law school or medical school, those numbers soared even higher.
With the 2016 Minnesota legislative session days away from its March 8 start, student loan debt jumped to the forefront for party leaders. Rep. Erin Murphy, DFL-St. Paul, led the St. Peter discussion, while House Minority Leader Paul Thissen, DFL-Minneapolis, facilitated the College Affordability Roundtable in Mankato.
District 19A Rep. Clark Johnson, DFL-North Mankato, joined both roundtables, first at Gustavus and then the next morning at Minnesota State University, Mankato.
“It’s not just a student issue, it’s a family issue,” Murphy said. Many parents and grandparents often have to co-sign for a student’s college loan. When the student falls behind or can’t make the monthly payments, the co-signer is legally obligated to assist. Credit ratings often dip for both.
And it affects both the economic and emotional well-being of many, Murphy stressed, relating her own family’s battles, including her own collegiate loans.
“We borrowed a lot of money to send our kids to college. We’re always going to be carrying debt and that’s frustrating. I worry about it for my kids.”
But the worry begins while many students are still in college. The economic burdens of increasing college tuitions, textbooks and housing force many students to work 40 hour a week jobs, while balancing a full-time class load. Too many suffer then suffer in the classroom, or worse, drop out, according to Johnson, who has advised students at MSU.
“A lot of times I’d be working with students and about 90 percent of those struggling we’re doing so because of finances,” he noted. “A lot of times how well you do in college is how much money you have in the bank.”
Gustavus student Laura Carpenter said, “I almost didn’t come to Gustavus because of the cost. And that’s a shame. I’m so grateful my parents help me, but not everyone is able to get that help.”
For others, staring soon at a June graduation, the worries grow.
“It’s incomprehensible to me,” said Gustavus student Andrew Deziel. “How is it going to affect my lifestyle? How are you going to afford a house or have a family? I think I need to stay in school. I love it. But wow, that’s a lot of money.”
Gustie Taylor Wicklund shares similar concerns. It’s a balance, she noted, between wanting to be at Gustavus and soak in the benefits of a liberal arts education and able to deal with it financially.
“Emotionally, Gustavus makes sense,” she said. “But financially, sometimes it doesn’t add up.”
Still others question the logic behind high student loan interest rates and the ability of banks to access funds at 0 to 1 percent.
“Why when I borrow money it’s 7 percent and banks can borrow it at 2.5 percent (or less),” said Gustavus senior Jace Riggin, a North Dakota native. “What is the ethically right thing to do?”
Rep. Johnson agreed, questioning why the U.S. government and lending industry can’t reduce those rates, adding he believes it’s bad public policy for the federal government to make a profit off student loans.
With an even larger Minnesota state surplus expected to be announced this Friday, along with a proposed $1.4 billion state bonding bill heading toward the 2016 Legislature for debate, Murphy said it’s time to help ease student loan debt and the high costs of college.
“It’s one of those points in time that we could put some money into higher education,” she said.
Rep. Thissen joined representatives of the North Star Policy Institute, Education Minnesota and the Minnesota Nurses Association to talk with students and MSU staff in Mankato.
“These discussions are going on in 11 places around the state,” Thissen said. “It’s clearly an issue that matters, obviously, to you but also to your parents. There’s a ripple effect. Continuing this discussion is certainly important to us.”
Staff in Mankato echoed similar tales which students voiced in the St. Peter discussion a day earlier, joining the MSU roundtable.
“Most of the students in our programs are working, many of them multiple jobs,” said Norma Krumwiede, professor of nursing at MSU.
Besides the regular cash-flow and economic concerns students shared at the MSU roundtable, it was common to hear “shocked” and “surprised” by many who were staring at massive loan debt following graduation. Easy access to student loans, coupled with predatory lending practices by some consolidation companies, wading through it all troubled many.
And because of those huge debt loads, too many students are forced to either take jobs in a field not desirable to their field of study or move to the metropolitan area where higher salaries are possible, according to Roger Severas, professor and chair SU’s Department of Finance.
“They’re doing something that they don’t necessarily want to be doing because they have to pay off their loans,” he said. “That’s a drain on the economy. But it’s also a drain on the personal lives of these students.”
And often, Severas noted, it becomes a drain on rural Minnesota, which loses some of its best and brightest.
Johnson stressed it’s not an easy solution, considering the philosophical differences between parties in St. Paul. But he added there’s an issue of global competitiveness, which can often carry a price.
“Part of that expense is marketing quality and competing with a global economy,” he noted. “That’s a huge dynamic.”
But there’s also the importance of bringing in first-generation students into higher education and creating a more diverse student body, Johnson said.
“Minnesota has to do a better job of getting first-generation students into college. You’ve made it here. Think of all the people who haven’t made it here.”