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Colleges Squeezing Out Less Profitable Home State Students

A change in funding at state colleges and universities is starting to change who makes up the student body. In-state students, even with perfect grades and impressive lists of extra-curricular activities, are being passed over in favor of out-of-state students willing to pay three times the tuition.

A scathing report last month accused the California State University system of admitting too many out-of-state students, and reducing opportunities for California residents to attend college in their own state.

When students move into states and squeeze out local students looking for an affordable education, access to the middle class, and increased opportunities—all promises of a public university – are lost.

California isn’t alone.

As college costs and student debt increase, schools nationwide are looking farther and farther away to fill the student body with higher paying out-of-state students to help sustain operations.

When colleges look out of state to fund their education, they go against their mission as a public good. Tuition-dependent schools are in essence privatized, relying on students rather than public funding to provide an education.

In Oregon, the state legislature, following a national trend since the recession, decreased higher education funding by 33.5 percent between 2008 and 2015. It’s the sixth highest cut in the country. Per student, the state reduced spending 32 percent between 2002 and 2012.

Without funding from the state, schools now rely increasingly on tuition for their operating budgets. In 2001, Oregon’s schools received 47 percent of their funding from the state; today the state provides 19 percent. To make up the difference, schools have shifted their funding from 45 percent from tuition to 73 percent.

This year, the University of Oregon’s student body is 35 percent out-of-state students and 14 percent international students. The remaining 51 percent are Oregon residents, much lower than the average of 73 percent at Oregon’s other public universities.

It isn’t just that the University of Oregon is so much more appealing to more students outside of Oregon. The University of Oregon needs out-of-state students for its bottom line – out-of-state students pay three times the tuition as Oregonians.

Twenty percent of the student body is from California alone. The school hired two full time recruiters based in California to encourage students to come to University of Oregon and pay full tuition.

Having more Californians in Eugene is not a problem – the problem, as in California, is that fewer are able to attend college in their home state. Between 2005 and 2009, the share of less lucrative Oregonians making up the freshman classes at the University of Oregon dropped from 79 percent to 59 percent.

Oregon and California aren’t alone in this trend. Out-of-state students outnumber in-state students at the University of Alabama, the University of Michigan, and the University of Iowa.

When colleges look out of state to fund their education, they go against their mission as a public good. Tuition-dependent schools are in essence privatized, relying on students rather than public funding to provide an education.

If Germany Can be Tuition Free, Why Not Us?

There was some very exciting news coming out of Germany this week, when the country announced that it is scrapping tuition and fees for its universities. Organizing is widely credited with building the public will and political momentum for free college. In fact, Dorothee Stapelfeldt, of the Hamburg Parliament, told reporters this week, “Tuition fees are socially unjust.”

Free or low-cost higher education is typical in most of Europe.

In Germany, tuition is a mere fraction of what American students pay. But with Germany, which has been taking heat for pushing austerity measures that have unnecessarily constrained the economy, leading on this important issue it, brings hope that we can keep building the momentum in the U.S.

And it’s beginning. In Connecticut, Gov. Dannel Malloy has unveiled a plan that will help folks who are already burdened with student debt. His plan calls for state tax breaks for interest on student loans, but more importantly, it would create an authority in the state that would allow students to refinance their debt at market interest rates. Additionally, he’s working to create the Connecticut Financial Aid Pledge, which would offer assistance to help qualifying Connecticut students graduate without debt.

This is a step in the right direction, but the U.S. is still miles away from the free college tuition. Students, teachers unions, and communities have been working for nearly ten years in Germany to win free schooling. Here in the states it’s just recently risen to be part of the national conversation.

Nascent coalitions like the Higher Ed Not Debt that the Alliance works alongside, will continue to push for fully funded education, and to ensure that our young people don’t enter the workforce carrying student debt. We need other states to step up to the table to match and beat this proposal.

Because, as the Minister for Science and Culture in Lower Saxony said this week, “We got rid of tuition because we don’t want higher education which depends on the wealth of the parents.”

Graduates Struggle Under a Mountain of Debt

College is supposed to be the pathway to a better job and a better life, but for students across the country college is also the pathway to a life of debt.

Since 2008, states across the country have decreased their investment in higher education, with every state except for Alaska and North Dakota providing less per student in 2014 than in 2008. These cuts have led colleges and universities to increase tuition to make up for the lost funding, shifting that burden onto students and their families.

“A Mountain of Debt,” released this week in Washington and Connecticut, show clearly that when students face increased tuition and low wages, many must turn to student loans to cover costs. In fact, nationwide 70 percent of students graduate with student loans. The average amount of debt at graduation is $29,000.

Students in states like Washington and Connecticut find themselves unable to get by without loans for college, and unable to easily pay them off after graduation.

“I was working 80 hours a week to pay for school and living expenses. My average day would include working multiple fast food jobs sporadically thrown between classes, working one job until 8:30 at night, working 10 p.m. until 4 a.m. loading trucks in a factory, then getting up for class at 8 a.m. and doing it all over again,” said Alex Katz, a student at the University of Connecticut.

Christina Hoadley, a student at Central Connecticut State University, works two jobs to help pay for college, but still is worried about the prospect of paying off her loans. “After grad school, I anticipate walking away with a loan amount to the tune of $40,000. I’ll have to begin paying on all that within 6 to 8 months after completing school. It’s a lot of stress knowing the huge weight of debt that lies ahead.”

In Washington, Roxana Pardo Garcia loves the work that she has found since graduation, but she does not earn enough to make paying off her student loans easy. “My current student loan debt load is $19,000, and my loan payments take about 20 percent of my monthly take-home pay. I just wish I could help my mom out more. After all, she is the reason I went to school: to lift us out of the cycle of poverty.”

Bernadette Binalangbang of Tukwila, Washington has had to take a job outside of her field just so she can work to pay off her student loans. “I really love to bake and making pastries is my passion, [but] I’m currently employed full-time at a medical lab. It’s a complete shift from what I’d like to be doing, but it pays my bills and keeps me afloat — just barely. My student debt payments take up more than 30 percent of my monthly income.”

Disinvestment by states has left students and graduates like Alex, Christina, Roxana, and Bernadette in an uphill battle against the mountain of debt they’ve accumulated. States like Washington and Connecticut need to reinvest in higher education, or even more students will find themselves with no choice but to take out loans that they will repay for years to come.

Learning Experience: Two Bachelors Degrees and Deep in Debt

In my family, going to University was never a question. My sisters and I were raised with the idea that higher education was our ticket out of poverty. Like our peers, we clung to the American dream of graduating and establishing careers that would allow us to fulfill our dreams of traveling, building a family, owning a family home, and eventually retiring in comfort. What we didn’t count on was the crippling debt we would have to surmount.

I graduated in June from Seattle Pacific University. After working full time for the last four years, I earned two bachelor’s degrees, and roughly $140,000 in debt.

I was so steeped in the ideology of higher education that when the bills came in for tuition, books, and housing, the fear associated with the prospect of not having a degree to my name exceeded my anxiety at my mounting debt. So much so, that when the grants and scholarships that I had received began to run out, my mother consented to take out parent-plus loans to keep not only myself, but also my two elder sisters in college, under the condition that we would repay the loans in her name.

Some of my peers were not so lucky and had to drop out. Six months later they were working minimum wage jobs attempting to repay the loans they had been able to take out – still without their degrees. Read more

Starbucks’ Free College Gimmick Clouds the Real Problem

student drinking coffee

As we’ve reported here and here, the state of higher education in this country has reached a crisis. The cost of tuition has risen substantially faster than any other good or service over the past 40 years.  There are many that are calling the student debt crisis the next financial bubble.

Under the Starbucks plan, employees would receive a discounted tuition rate for the first two years from Arizona State University’s online program. The discount amounts to roughly $6,500 over two years on $30,000 retail price. The remainder of their tuition is expected to be paid by the employee, through personal savings or federal Pell Grants or scholarships.

While this promotion may be somewhat helpful for struggling low-wage Starbucks employees, it does little to fix structural deficiencies in the higher education system. They are deficiencies that Starbucks directly causes and benefits from. As a key member of the Fix the Debt organization Starbucks funded groups that were lobbying for lower corporate tax rates.  These tax cuts are a direct cause of the disinvestment we’ve seen over the past 40 years in higher education. Read more

Student Debt Threatens the Future for Everyone

overwhelmed_student-300x300A college degree was once an investment in the future, a path to a good job, a home, car, vacation and money set aside to retire some day. But that college education has for many, become a ball and chain limiting future growth. Unless we begin to address this debt issue we will continue to see a growing chasm in American society – those who have access and wealth –  and those who have mortgaged their future with little way to dig themselves out of debt.

Since the Great Recession began, states have dramatically cut their allocations for higher education. Nationwide, higher education budgets have been slashed 27 percent since 2008 or more than $2,300 per student.  We are just now beginning to see the effects on our economy – and the great risk to our future.
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Families and Our Future Sinking in a Sea of Student Debt

This is the first in a three-part series by the Alliance for a Just Society, looking at the high cost of student debt for our country and for our future.students campus photo

Young college graduates are putting their futures on hold as they struggle under the burden of high student debt – and a weak economic recovery that has failed to provide good jobs for them. Young adults in their 20s and 30s are delaying buying houses, cars, furniture or starting families. The implications for every family, and our nation, are huge.

Student loan debt has passed $1.2 trillion, according to the Consumer Financial Protection Bureau. Such widespread indebtedness has many causes and the ramifications are pervasive – including a decline in purchasing power.
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