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Student loan debt becomes talking point

NewsOK on August 26, 2012
by Casey Smith of

With more than a trillion dollars in student loan debt outstanding, the topic is a presidential campaign talking point.

Nationwide in 2010, an estimated two-thirds of students graduated with average debt of $25,250, according to independent nonprofit The Institute for College Access and Success. The institute estimates 56 percent of students in Oklahoma graduated with student loan debt that averaged $20,708, a low amount compared with other states’ averages.

Charles Pelfrey Jr. checks work emails at his mother’s house in Tulsa, where he currently lives. Pelfrey has about $25,000 in student loan debt and doesn’t know how he’s going to pay it when his deferral period is over in a year. His home is in foreclosure.

Charles Pelfrey Jr., 32, doubts he’ll be able to make payments on his approximately $25,000 in student loans when they start again in a year, he said.

Pelfrey graduated from Oklahoma State University-Tulsa in 2010 with a bachelor’s degree in advertising. While a student, he worked the night shift at a manufacturing company, he said. He took online classes and watched his kids, now ages 6 and 4, during the day. Then he went to evening classes.

Pelfrey took out loans for more than he needed for school, and “young and stupid,” used the leftover money as supplemental income, he said.

Pelfrey doesn’t know whether his family could have made it without the loan money, but he knows they shouldn’t have started counting on it when they bought a home in 2009.

“We counted it as income, and once the income ran out, we didn’t have a plan. So just domino effect,” he said.

Not sure what he’ll do in a year, Pelfrey said he knows he won’t be a homeowner. JPMorgan Chase filed foreclosure against him in July, records show.

“Used appropriately, a student loan is a smart investment in yourself, but you have to do it right,” said Angela Caddell, the Oklahoma College Assistance Program director for communications, financial outreach and education.

The operating division of the Oklahoma State Regents for Higher Education provides college access, aid awareness, financial literacy and student loan management programs and services.

“Federal student loans are a tool like any other, and for many students, education after high school wouldn’t be possible without them,” Caddell said.

The program works with universities, colleges and other partners to help students borrow smartly from the beginning, she said. The default prevention team works hard to reach borrowers who face economic hardship and educate them about options.

“A lot of people hide and don’t respond to the calls or outreach effort,” Caddell said.

“Lenders want borrowers to be successful, and there are strategies to help figure it out.”

Pelfrey said he regrets borrowing so much and living comfortably before he could afford it. But he doesn’t regret getting the degree he always wanted, which he said led to promotions and his current role running his manufacturing department.

“If I’m paying that ($25,000) over the rest of my life, it’s fine getting that done,” Pelfrey said. “It’s a matter of pride.”

Going to college is worth it, but graduating with debt makes it harder to become financially secure, particularly for unemployed or underemployed borrowers, said Jennifer Mishory, deputy director at Young Invincibles, a nonpartisan nonprofit.

Mishory cites a 511 percent increase in student loan debt between 1999 and 2011.

In 1993, average student loan debt was $9,320, compared with today’s $25,000, she said.

An organization survey of 18- to 34-year-olds found 73 percent believe students graduate with too much student loan debt.


Mishory attributes increases in student loan debt to tuition increases. Others also cite reasons that include more students attending college, a weak economy and irresponsible borrowing.

The published cost of higher education has been increasing beyond general inflation for decades, said Jennifer Ma, analyst at the College Board Advocacy and Policy Center.

The increases include Oklahoma schools, according to a Tulsa World analysis of published undergraduate tuitions at five of Oklahoma’s largest four-year public and private nonprofit universities. The World compared full-time inflation-adjusted 1980-81 tuitions with 2010-11 tuitions.

Resident tuition and mandatory fees on the University of Oklahoma’s main campus increased 318 percent. Oklahoma State University’s main campus costs rose 327 percent.

And at the University of Central Oklahoma in Edmond, the increase was 289 percent, the analysis shows. Nonresident costs increased 287 percent at OU, 303 percent at OSU and 294 percent at UCO.

At private schools, the University of Tulsa’s costs rose 346 percent, and Oral Roberts University increased 148 percent, the analysis shows.

OSU and OU both cited state appropriations as primary reasons for increasing tuition and mandatory fees.

Between fiscal years 1980 and 2013, the percent of total revenue OSU receives from state appropriations dropped from about 43 to 22 percent, according to the university.

OU President David Boren said that the university experiences uncontrollable increases in fixed costs, such as health insurance premiums and the state continues to supply smaller and smaller percentages of the university budget. States’ lack of support is a national trend that threatens America’s future, and countless students will be prevented from achieving an education if universities are forced to continue increasing tuition rates, Boren said.

“While the weak economy is a factor (in rising tuition), the declining share of university budgets paid for by state governments has been a bigger factor,” Boren said. “States are choosing as a matter of policy to pass on more of the cost burden for a college education to students and their families.”

Like virtually every area of government, higher education is experiencing increased fixed costs, said Alex Weintz, Gov. Mary Fallin’s communications director.

“Whether it is education, public safety, transportation or some other equally important area of government, state entities have a responsibility to jealously guard taxpayer dollars and to ensure that public resources are being used as efficiently and effectively as possible,” Weintz said.

In fiscal years 1981 and 2011, the Regents for Higher Education received 15 percent of total state appropriations, Office of State Finance data shows. The regents received 14 percent in fiscal year 2013.

Executive Vice President Steve Kreidler said he is not angry about state appropriation cuts UCO has received, which amount to $4 million in the last five years. That came at a time when UCO experienced $9 million in mandatory cost increases and 1,500 more students, according to the university.

“The state has a certain amount of money to give out, and it’s a tough decision,” he said, pointing to rising costs of federal mandates and important needs in many areas.

It’s valid to question whether students were paying their fair share of tuition in 1980-81, Kreidler said.

Over the decades, national opinion shifted from believing higher education benefited the public at large to believing it benefitted those with a degree much more than society, he said. Pressure was put on states to fund less of the cost for obtaining degrees, he said.

Provost Roger Blais said the University of Tulsa’s tuition was artificially low in 1980-81 — part of a recruiting strategy made possible by money from an endowment.

Increases also reflect students’ expectations for higher, and more expensive, standards of living over the decades, Blais said. The Higher Education Price Index, based on the goods and services those institutions purchase, increases faster than the consumer price index each year, he said.

The cost to provide a high-caliber education has continually risen at both public and private institutions and has caused tuition to increase, said Jeremy Burton, senior director of Oral Roberts University relations and communications.


Nearly every university cited austerity measures and efforts to garner money from sources other than students to mitigate tuition increases.

Universities and the state reported they offer numerous public and private scholarships and resources to help students who are taking out loans. The state is providing $281 million in scholarships and tuition waivers for fiscal year 2013, according to the regents.

ORU offers a wide range of scholarships, including the $8 million annual Whole Person Scholarship Program, Burton said. Virtually all full-time ORU residential undergraduate students benefit from a form of aid at some time, and the discount rate on the university published price was nearly 49 percent in fall 2010, he said.

TU competes for a talented student body with numerous merit-based scholarships, Blais said.

OU’s Campaign for Scholarships has raised nearly $200 million in additional scholarship funds in the last four years, more than doubling private scholarships for students, Boren said.

UCO, which plans to announce a major fundraising campaign in September, increased the amount of free aid students receive by 90 percent in the last five years, according to the university.