GWEN IFILL: Now we continue this week’s series Rethinking College.
As states cut funding for public institutions, students are taking on bigger debt burdens to pay for their education. More than 70 percent of last year’s college graduates had student loans, averaging almost $30,000 each.
Hari Sreenivasan has our report.
HARI SREENIVASAN: It was a great day for Ann DeGarmo, who joined 6,400 students for graduation at the University of Wisconsin in Madison last May. The milestone marked the beginning of her life after college.
ANN DEGARMO: Oh, my God. Oh, my God. Oh, my God. It’s happening.
HARI SREENIVASAN: It also marked the beginning of payments on $58,000 of student loans. The heavy debt load carried by students like Ann has sparked a national dialogue among policy-makers.
And it’s easy to see why. Seven of 10 graduating students left college last year in debt. The average debt load is $26,000. One in 10 owes more than $40,000. Behind home mortgages, student loans are the second largest source of personal debt, more than credit cards, more than auto loans. The total bill due for students in America tops $1 trillion.
Throughout college, Ann DeGarmo held a job. Even so, she took on private and federal loans to make ends meet.
ANN DEGARMO: I couldn’t work enough hours with going to school full-time and be able to afford to pay my rent in full.
HARI SREENIVASAN: Now the reality of paying down debt for years has her worried.
ANN DEGARMO: It’s hard. It’s really hard, and it’s really scary.
HARI SREENIVASAN: Why are you scared?
ANN DEGARMO: This education is going to cost me, you know, a car, a house, potentially.
This education is going to cost me, you know, a car, a house potentially. It’s like, $58,000 isn’t change. It’s definitely not pocket change. It’s going to cost me the ability to start a family when I want to, potentially, depending on how fast I can pay it back.
HARI SREENIVASAN: DeGarmo brought her concerns to a town hall meeting in Madison.
ANN DEGARMO: About half of my debt is federal debt, and about the other half is private debt.
HARI SREENIVASAN: The gathering was organized by an advocacy group called One Wisconsin Now. Scot Ross is the group’s executive director.
SCOT ROSS, Executive Director, One Wisconsin Now: We have traveled around Wisconsin, and we have talked to people of all ages about their student loan debt. And it’s soul-crushing for them. They’re saying, all I want to do is go to college, and now I have got a 25-year obligation.
HARI SREENIVASAN: Student Saul Newton from Northern Wisconsin described the difficult time he had affording college.
SAUL NEWTON: Over the course of two years, I saw my tuition skyrocket. I was working multiple jobs trying to keep my head above water, but I was drowning.
HARI SREENIVASAN: Newton says he joined the Army to avoid serious debt, and was quickly deployed to Afghanistan during the military surge in 2007.
SAUL NEWTON: I’m grateful that now I qualify for the G.I. Bill and I can go to college, and I have that opportunity, but I think it’s very indicative of the types of choices that students have to make now, that I had to make the choice to go to war in order to afford a college education.
HARI SREENIVASAN: Congressman Mark Pocan, a Democrat who represents Wisconsin’s Second District, believes student debt is creating a drag on the country’s economic recovery.
REP. MARK POCAN, D-Wis.: Coming out of school, you’re paying a lot of loans. If you’re not buying a new car, you’re not stimulating the economy. Instead of buying a home, you might continue to rent. So some of the things that really help us at the most base level of trying to bring the economy up and get it going while we’re still recovering from the recession is held back even further by people having high levels of debt.
HARI SREENIVASAN: So what’s causing this situation?
REP. MARK POCAN: With the crash of the entire economy just a few years ago, we really haven’t seen states put money back into their public institutions. So while you still have the cost of education, if it’s not being covered as it traditionally was, often by the states, it’s gone and got passed on to students over and over.
HARI SREENIVASAN: In fact, tuition at public institutions has risen more than 50 percent over the last decade. It’s a significant number, given that 70 percent of undergraduates in the United States attend public institutions.
Recently, Wisconsin’s Governor Scott Walker weighed in on the rising costs of higher education. In announcing his reelection campaign, Walker promised to extend a two-year tuition freeze at the University of Wisconsin.
GOV. SCOTT WALKER, R-Wis.: More students and more working families can afford to send their sons and daughters to get a great education at one of our many U.W. campuses all across the state. How about that?
(CHEERING AND APPLAUSE)
HARI SREENIVASAN: Ross welcomes any attention to high college costs and heavy debt as an election-year issue.
SCOT ROSS: There are forty million student loan debtors out there. They need to get organized. If you think about the amount of time and discussion and debate and fear that elected officials have to, say, doing something with Social Security, well, there’s 65 million people who get Social Security. Now we have got 40 million people with student loan debt.
That’s forty million people who, if they get involved in the public policy debate, if they get organized, they’re going to be a voting bloc that people will fear to not act.
HARI SREENIVASAN: This spring, a flurry of bills were introduced by Democrats in Wisconsin and Washington to lower the existing debt burden, so far with little success. One bill proposed by Congressman Mark Pocan would allow for refinancing of student loans at lower interest rates.
REP. MARK POCAN: In anything else in the world, if you’re a small business, if you own a home, you have a car, you’re a state or local unit of government, everyone’s refinancing loans because we’re at historic lows, and yet, with student loans, it’s really not allowed.
HARI SREENIVASAN: What about the folks that say, well, where’s personal responsibility, this was the cost of going to school?
REP. MARK POCAN: I think the difference is, you know, like I said, I also took loans, in addition to getting some grants, when I went to school. I could pay it off in five years. Now these are people leaving with $26,000, $58,000, and not doing it in five years, but doing it in 10, 20 years.
ANN DEGARMO: It’s difficult to kind of understand as an 18 or-19-year-old that, you know, this education that you want, and you’re expected to get at this point in order to get a good job, is going to cost so much money.
HARI SREENIVASAN: It is still true that, to get the good job, a college degree is worth the money. According to the Federal Reserve, a bachelor’s degree provides a 75 percent wage advantage over a high school diploma.
Despite the high cost, some studies say the rate of borrowing has remained steady, and the vast majority of graduates are pleased with their education.
ANN DEGARMO: The college experience is great. I have had a lovely, a wonderful time in college, but it’s challenging, and it’s sometimes very exhausting. But I think in the long run, it’s worth it. It’s worth it.
HARI SREENIVASAN: DeGarmo is likely to get some relief on her federal student loans from the president’s executive order this summer, which caps payment to 10 percent of monthly earnings.
GWEN IFILL: Tomorrow, Hari looks at the impact that massive open online courses, called MOOCs, are having on traditional teaching at the university level. And, online, you can read about how New Hampshire is experimenting with a tuition freeze at its public colleges to keep its students in-state.
Plus, join us all week for NewsHour Twitter chats. Tomorrow’s topic: What gives a college degree its value?