Research Report: Sentenced to Debt
The Hidden Costs of Unaffordable Education
For this generation of students, a college education is becoming significantly more expensive. This trend, observable both in Oregon and across the country, makes college unaffordable to many, forcing students to turn to student loans as a necessary part of funding their education. In Oregon, students borrowed more than $1.34 billion for the 2013-2014 school year, twice as much as they borrowed a decade before.
This trend comes as legislators reduce funding for higher education, leaving Oregon far behind other states. Oregon’s funding cuts since the beginning of the Great Recession amount to the fourth highest in the nation. Meanwhile, Oregon is last in the U.S. in higher education spending, with 3.4 percent of its budget funding colleges and universities as of 2013.
These funding cuts shift the cost of attending college from the state to the students, funding a public good mostly through tuition. This privatized model is the primary driver of Oregon’s student debt crisis.
Entering young adulthood with student debt has a significant impact on the financial and health outcomes for students. Those with debt find it more difficult to purchase a home, save for retirement or start a small business. With debt, many experience high levels of stress or anxiety. Debt without the means to repay it ranks fifth on a list of most stressful life events.
Furthermore, student debt affects the entire Oregon economy, with debt payments in 2013 resulting in
$269 million in lost economic activity and 2,220 lost jobs.
A 2015 survey of southern Oregon students finds students struggling to pay for housing, food, utilities and childcare. Respondents overwhelmingly say they need debt to fund their education. And respondents resoundingly state that policymakers are not doing enough to address the debt crisis.
Among the key findings:
- 88 percent of survey participants who took out loans to pay for school did so because they could not afford an education otherwise.
- Nearly three-fourths of respondents reported expecting to graduate with debt levels between $25,000 and $75,000.
- More than two-thirds of respondents reported working at least one job.
- 57 percent of respondents said they struggle to afford housing and 46 percent said they are food insecure.
- Two-thirds of respondents say they experience high levels of anxiety about their student loan debt, while 40 percent suffer from extreme or overwhelming anxiety.
- 93 percent of respondents say education should be available to everyone, regardless of income.
- 3 percent of respondents felt that elected officials understand the student loan-debt issue.
Based on these findings, we recommend significant and systemic changes in Oregon’s higher education model. We recommend that the Legislature:
- Fully funds Oregon’s public higher education so it is accessible to anyone seeking a higher education but unable to afford it.
- Raises revenue by mandating corporations pay into the system that produces an educated workforce from which they benefit.
- Robustly funds financial aid programs.
- Increases the minimum wage to address the shortage of living-wage jobs and increase student financial stability during and after college.