As thousands of California students apply for 2022 admission to the state’s colleges and universities, one big question remains unanswered for many of them: how to pay.
That confusion, due in part to inadequate communication from institutions, leads to far more students than necessary taking out loans. Nearly 4 million Californians owe $147 billion in student debt, according to the Student Borrower Protection Center, and more than 500,000 are delinquent or in default. While just a sliver of the borrowers, that’s still half a million students who face a rocky financial future. It’s especially an issue for Black or Latino residents who have higher default and delinquency rates than others, a new report notes.
With an eye on reducing debt problems, the state is preparing to hire its first student loan ombudsperson by the end of the year, and a panel of experts recently told the California Student Aid Commission – the agency responsible for managing Cal Grants – that the state should make significant changes to help students navigate college costs.
Better communication would prevent some students from borrowing money they don’t need, said Robert Shireman, a panelist and the director of higher education excellence at The Century Foundation.
“It’s about helping people access the resources that are there,” he said. “Knowing you can get a Pell Grant or a Cal Grant can help a student plan and take advantage of those options.”
Despite debt numbers that look shocking, California is a relatively low-debt state. Although the high cost of living significantly increases student expenses, the state’s public colleges and universities are far more affordable than those in most states, and Cal Grants and college-specific scholarship programs help defray remaining costs.
University of California Riverside student Brendan Rooks, 22, is just about to graduate with $10,000 in student debt. Although he has less debt than many of his classmates, he’s been frustrated by what he says is a lack of information about scholarship options.
“There’s not really anyone to talk to,” said Rooks, who added he has learned more from his work with the Student Debt Crisis Center advocacy group than from anyone on campus. “It’s crazy that we’re asking 18-year-olds to make these decisions about finances.”
Communication has been a challenge, admits Shawn Brick, executive director for student financial support at the UC system. Students are bombarded with important information, especially as they first enter college, so key financial details tend to get lost in the fray.
“Colleges and universities are finding that we need to step up our game in how we communicate with students,” Brick said. “A lot of time we default to email, and a lot of our students aren’t as diligent at checking their email as they were 20 years ago.”
The confusion and shortage of accurate information tends to hit the most vulnerable students the hardest. The California Student Aid Commission report notes that neighborhoods with more Black or Latino residents have higher default and delinquency rates than others, even when those neighborhoods have comparable income levels.
And Black borrowers with bachelor’s degrees have nearly 50% more student debt than their white peers four years after graduating, according to the Brookings Institution. Part of the problem is that Black students are more likely to attend for-profit colleges, which are often more expensive and award degrees that are valued less by prospective employers.
The nonprofit Institute for College Access and Success notes that more than half of the students at 55 California colleges or universities both borrow and run into repayment problems; 49 of those schools are for-profit.
Veronica Williams, a 29-year-old Sacramento resident, recently graduated with a master’s degree from Grand Canyon University, a largely online for-profit institution based in Arizona. Between her graduate education and her undergraduate work at Cal State Sacramento, she owes $100,000 in student debt. (Grand Canyon University was previously a for-profit institution but is transitioning to nonprofit status.)
Williams, who grew up in the foster care system before being adopted by an aunt, said she’s been badly counseled by relatives who have urged her to stop paying back her loans. She’s ignored them but says other borrowers need trustworthy advice to counteract problematic suggestions.
She’s managed to keep up her payments, but her debt has made it hard for her to pay for housing and her car, and it may keep her from going back to school for her doctorate.
“The reality is it’s scary due to my student loans,” she said.
The state aid commission hopes to help graduates like Williams by strengthening California’s resources for student borrowers. The commission’s panel of experts recommended a “triage model” that would assess what borrowers need and how to best provide that help, whether it’s self-service answers on a website or legal help from a nonprofit group.
The panel also recommended improvements to how schools provide financial options to prospective students. It cited a Texas requirement that high schools teach students about college affordability, which has increased the number of students applying for financial aid and those opting for lower-cost loans.
“California is one of five states with no personal finance standard or requirement,” the panel noted.
Much of the responsibility for decreasing loan reliance comes down to the colleges themselves. Student debt varies from campus to campus, even among schools with similar costs.
At California State University campuses, for example, the total cost of attendance is between $20,000 and $25,000 at most schools. But, according to the Institute for College Access and Success, debt ranges from $11,400 for Cal State Bakersfield graduates to $24,300 at Humboldt State.
And at the University of California, where annual student costs hover in the $30,000 range, the average student debt ranges from about $18,000 at Berkeley and Merced to over $22,000 at UCLA. The university is trying to eliminate the need for student loans for many students, Brick said.
Colleges and universities should be doing more to educate students about financial aid options, said Samantha Seng, legislative manager and policy adviser at NextGen Policy, a nonprofit advocacy group.
“This is not just an issue of borrowers needing this information, where it’s all on them,” said Seng, who was on the aid commission’s panel. “Institutions and loan servicers have some responsibility too.”
Parents, students and schools should start talking about how to pay for college long before a decision is made, said Scott Hagg, associate vice president for enrollment management services at Cal State San Marcos. The campus, near San Diego, has tried to help students find better ways than loans to pay for tuition and for the region’s high cost of living.
“I think we need to be honest and real with people about the consequences of taking out a loan,” he said. “Loans are not a bad thing. I just don’t think it’s reasonable to mortgage our future to attend a first-choice school.”
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