LITTLE ROCK, Ark. — Arkansans owe an estimated $9 billion in student loan debt as college tuition levels continue to climb. Legislators and policy makers are looking for fixes. Some point to quicker completion times, while others say bloat in administrative costs could play a part.
“See, look this is what I’m talking about.,” Anna Drinkwitz said, reviewing the totals of her student loan balances.
Kyle Schnebelen and Anna graduated years ago. Right now, these two 30-somethings still face more than six figures’ worth of student loan debt between them.
“It’s literally something that determines your entire life,” Schnebelen said. “We’re giving these students the option to borrow all this money, and I’m not sure they know what that really entails.”
Their balances are actually growing because of an interest rate around 8 percent, which is more than Schnebelen’s mortgage interest rate. They pay more than $1,000 a month, which they say barely makes a dent.
“You’ve got these loans to pay off that honestly feel like they’re never going to get paid off,” Drinkwitz said. “I value my degree, and I love my career. But there are times where I know I didn’t realize the gravity of what taking out those student loans meant when I was in graduate school.”
Schnebelen is a small business owner. Drinkwitz is a physical therapist. In a state with one of the lowest median household incomes, their careers would put them in what many would consider a cushy cash flow spot. Except they’re having to make budget cuts, put off their wedding, delay starting a family and haven’t seriously started saving for retirement.
“It takes half or more of my paycheck to pay what I do to student loans. You’d like to pay more, but there’s no way to get it paid off in a year or two,” Drinkwitz said. “That interest just keeps piling on, and it never stops.”
“We were told, our generation, that you have to go to college. You have to get a bachelor’s degree,” Schnebelen said. “And I don’t know if that’s even enough anymore to be competitive. In the meantime, we’re financing students’ futures and they aren’t going to be able to pay for it.”
Schnebelen and Drinkwitz graduated toward the end of the recession. The cost of higher education has continued to climb since then.
“It’s probably worse,” Schnebelen said. Drinkwitz agreed, “I don’t even want to know how much higher it’s gotten.”
Tuition Increases Above Inflation: 1987 to Now Around 300 Percent
KARK took a look at four of the state’s public universities (Arkansas State, Arkansas Tech University, University of Arkansas, University of Arkansas Little Rock and University of Central Arkansas).
Between the 2009-2010 academic school year and 2014-2015 year, in-state undergraduate tuition and fees increased, even adjusting for inflation, anywhere from 10 to 20 percent above inflation among the schools, according to those institutions’ feedback data reports from IPEDS, a data compilation provided by the federal government.
From 2000 to 2015, that jump grew to anywhere from 75 to 100 percent higher than inflation. And since 1987, the increase above inflation tracks closer to 300 percent.
“That’s not even including room and board,” said State Representative Mark Lowery, R-Maumelle. “When you start adding in room and board, books and other fees, those numbers can really climb. That’s especially true as we’ve seen students take longer and longer to complete degrees.”
While director of the Department of Higher Education for the state, Brett Powell spent the past year overseeing efforts to address the affordability gap at Arkansas colleges.
“To ask students to borrow more is probably not something that’s going to be feasible in the future,” Powell said. “It has gotten less affordable, both because it’s more expensive to provide, and because students are asked to pay more of the share of the cost.”
Part of the increases college students are seeing involve higher enrollment numbers, Powell said, which were largely induced by the recession. As people were laid off or changed careers, they headed back to colleges for further education. Those spikes have since begun to level off. Students who would typically be less likely to succeed have also grown on college campuses, he said, which requires additional services like tutoring, counseling and additional advising.
Powell added that state funding has remained flat for the past decade. State Representative Greg Leding, D-Fayetteville, agrees state funding has been one issue that has led to higher costs on the college level.
“A big reason tuition keeps going up is that we’re not funding our schools sufficiently. We’re at about 10 percent below where we were pre-recession,” Leding said. “We’ve cut per-student Higher Ed funding the last two years. That’s pretty shortsighted when you consider that only about one in five Arkansan adults hold a college degree.”
“I don’t think there’s a magic bullet. I certainly don’t think there’s anything that would allow institutions to reduce their tuitions in the next few years,” Powell said.
Leding has floated the idea of a “No-Loan” policy he believes the University of Arkansas, and possibly other universities and colleges in the state, should consider and investigate. Under those policies, students (particularly low-income students) are issued grants instead of loans to reduce the burden of student debt they would face. According to Leding, more than five dozen major colleges use such policies, including several in the SEC.
“It allows them to avoiding crushing student debt, while remaining in state,” Leding said. “There’s typically buy-in from the student, either through work study or another form to have them put skin in the game.”
Lawmakers and school administrators are coming to terms with cutting costs to keep the masses coming to campus.
“Students and families are reaching a point if it does become unaffordable, then students aren’t able to attend,” Powell said.
Schnebelen and Drinkwitz figure that at the rate they are paying for their loans, they may have to pay until they’re almost 50 before they wipe out the balances.
“We’re just one couple. That’s what I want people to think about,” Schnebelen said. “We’re just one of hundreds. At some point the bubble is going to burst. What happens when a huge portion of your workforce has a debt load they can’t pay?”
“And we’re successful,” Drinkwitz said. “We’re successful and we’re struggling. We’re not contributing to the economy. We’re not buying houses. We’re not starting families. We’re stuck in this hole we got ourselves into, but we didn’t really have a choice based on what we were told was going to be good for our futures.”
Student Loans: All In…Over Their Heads?
Another contributing factor many say has led to the student loan debt surge is the way loan amounts are awarded and can be spent. Colleges cannot control how much in student loans a student accepts, and they cannot audit how a student spends the funds once direct college costs like tuition, fees and room and board are paid for.
“Students don’t have to take out the total amount they’re approved to receive,” Powell said. “But they can. Many of them can use those funds for living expenses. But there’s no way for the college to oversee if they’re actually spending that money on housing or game consoles.”
Schnebelen saying he agrees that giving students access to excess money, with the student possibly not realizing the impact it will have later on, can contribute to the problem.
“While I was in school, I would see it. Students would be borrowing to cover living expenses during college that they’ll spend the rest of their life paying off,” he said. “I think there needs to be an aspect of personal finance education to all of this.”
“We had loan counseling, which was just a presentation that you clicked through,” Drinkwitz added. “But at the time, you’re thinking that you have to pay for your degree; in my graduate program I didn’t have time to work, and you couldn’t take a year off to work and save up. So, you look at it as what’s another $1,000 on top of everything else. But then, you get out and your realize the costs.”
Essentially, these students at 18- or 19-years old, what many would consider kids, are taking out debt in the short-term without truly being aware of the longterm affect.
“I think universities have to start putting a focus on that when they talk to students about loans,” Lowery said. “Making sure they understand how much they should be taking out, for what purpose and how that will play out after graduation.”
One contributing factor some have floated as playing a role in climbing college costs is the idea of administrative bloat. Could high-paid administrators on campus, which some would argue are superfluous and duplicitous, be driving costs?
Those in Higher Education say increased costs are a product of that recession-inducement enrollment spike, and federal regulations that require colleges to meet certain standards to serve students. Powell said another aspect of the growth is a change of how faculty serve the college community.
“There was a time where faculty were the institution. They taught and were administrators,” he said. “As colleges grew, there were more administrative tasks to be taken on. That responsibility shifted to specific administrative positions, leaving faculty to focus on the classroom, research and instructional duties.”
Some of the growth in student populations on campus over the past decade or so, according to Powell, are those students who would not have traditionally gone or succeeded in college.
“There’s more tutoring that’s required. There’s more advising that’s required,” he said. “Then that cost gets passed directly onto the students. So it has become less affordable.”
There’s also the issue of services students have come to expect from college campuses. Health services, mental health counseling, career services — the list goes on. Those aspects drive attraction to universities to keep enrollments climbing. But they’re also services colleges didn’t offer 10-15 years ago.
Some lawmakers have described it as an “arm’s race” to drive student interest and enrollment in campuses, to generate funds through tuition and fees. But state funding, at this point, is also largely tied to enrollment.
“We’ve learned that part of the problem is the arms race between campuses when it comes to offering bigger and better amenities to attract more students. We want our campuses to have the best facilities and best personnel, but we need to make sure those investments are made with student outcomes in min,” Rep. Leding said.
“They add more and more amenities – more and more administrators who can help with different areas that have nothing to do with classroom instruction,” Rep. Lowery agreed.
Enrollments: Mountains and Valleys
Of the five universities that KARK took a look at, enrollment decreased at two of the five. That’s based on the “unduplicated headcount” data from IPEDS. The Arkansas Department of Higher Education agreed that would be an appropriate backdrop by which to place administrative growth.
At all of the schools, even those who have seen decreased enrollment since 2009, tuition and fees increased at a rate higher than inflation.
Administrators: Bloat or Support for Student Success?
ADHE also tracks college administrators who make more than $100,000. In 2009, the survey published by ADHE was roughly 450 pages long (excluding Appendices and Title Pages – that means it represented 450 administrators).
By the 2014-2015 school year, that survey had grown to more than 700 pages, a 60 percent increase.
“Many of these administrators have 0 student contact some of the highest paid administrators out there are raising money,” Lowery said.
Arkansas State’s top-paid administrator numbers grew by 51 percent, while enrollment during that same time period grew just 7 percent. UALR’s high paid admin growth was reported at 42 percent, while enrollment actually decreased by 11 percent. Arkansas Tech saw the lowest increase, of 14 percent, while seeing the largest enrollment growth of 29 percent.
Arkansas State’s Vice President for Strategic Communications, Jeff Hankins, took issue with some of the details included in that 51 percent growth. According to Hankins, the report contains seven football coaches who were not new positions, but who began making more than $100,000. The increase in their pay, he said, was contributed to by private funds due to tremendous success in the football program.
Secondly, he noted that one of the positions was actually attributable to the ASU system, instead of the Jonesboro campus. And finally, three of the positions were the result of the creation of a new nurse anesthesist program, which Hankins said creates an additional revenue stream for the university. Hankins contends if you remove the coaches, and the other four positions – the growth decreases by half.
The compensation report included athletics and coaches for all schools. Hankins contends the public would not consider assistant coaches to be college administrators.
“Arkansas State had the lowest tuition increase of any public university in the state this year at 1.9 percent, and we are committed to keeping tuition costs below the higher education price index inflation rate. Our tuition and fees cost ranks fifth in the state among public four-year universities. Our faculty salaries are higher than our peers and the state average,” Hankins added.
UALR’s Interim Chancellor Dr. Zulma Toro also addressed the growth, saying, in part that more than 90 percent of UALR’s students receive financial aid, including $20 million in scholarships. The University is currently working to generate funds to provide more need-based financial aid scholarships.
Toro went on to say, “Like many other organizations and businesses, we continue to streamline the way we operate. Two years ago, we reduced the number of our colleges from seven to six. On the administrative side, we reduced the number of top level positions. On the other hand, we increased our student fees to enhance public safety of our campus community. Managing an institution of more than 12,700 students, faculty, and staff is a challenge on many levels, but higher education is one of the most important strategic investments we can make in Arkansas.”
“The majority of our employees has received modest increases in the past seven years. Most of the new leadership positions we have added over the last few years are associated with efforts to recruit, retain, and graduate more students in Arkansas. As a growing research institution, we have dedicated resources to bringing talented research faculty to Little Rock and enhancing the support for this enterprise. These efforts align with the state legislature’s goals to increase the number of college graduates in Arkansas and to grow the state’s economy,” Toro added.
Professionals Pulling Up the Numbers?
“The emphasis should be putting our money where it most impacts student performance,” said Rep. Lowery.
Powell, said the data show that executive administration growth in Arkansas has been slow, adding the biggest bulk of growth comes from professionals who in some cases help students succeed, tied to those extra services.
“If they’re positions that lead directly to student success, in my view those are the right positions to add,” he said.
IPEDs numbers seem to bear that argument out. While management and executive positions for most institutions was below the number of full-time equivalent faculty, those positions combined with professionals like computer and IT services, instructional support staff, and others identified in IPEDS, those scales tip the other way. Some universities saw greater growth in the “other” category, which could be non-professional positions or those not included in other categories.
Faculty saw the slowest growth at the majority of the campuses, and Powell noted that many institutions have turned to part-time faculty for flexibility. He did note that part-time faculty are also paid substantially less than their tenured or full-time counterparts.
Outcome Based Funding Formula
Legislators are currently considering a new formula for funding colleges, which would include outcome-based funding instead of subsidies tied to enrollment numbers. ADHE is still working out the final metrics for the funding plan, but schools would be incentivized to reduce the years students spend on campus and increase effectiveness and efficiency to help lower student costs.
“They’re going to have to get on board with us in cost-cutting measures,” Lowery said. “They need to be more efficient with what they are being given.”
Some legislators have voiced concerns that outcome-based funding may lead colleges to cherry-pick students, avoiding those who may have more difficulty and need more support in the classroom. ADHE leaders say they believe colleges who currently serve underserved populations will continue to do so, because of their missions, and those factors would be given weight in the formula.
According to Lowery, the HIgher Education Realignment Taskforce is working toward the goal of having all stand-alone colleges not currently aligned with a system structure to be aligned with a system. Mid-South Community College recently joined the ASU system. Pulaski Tech College recently voluntarily merged with the UA System.
“We would prefer for it to be organic, but if it takes legislative action, we’re prepared to do that,” Lowery said. “That could eliminate a lot of duplicity in the system. You don’t need two purchasing managers. You don’t need a government liasion for every campus. There could be efficiencies to find there.”
The picture is undoubtedly complex, and administrative bloat may be just one angle.
“We’re financing kids futures, and they’re not going to be able to pay for it,” Schnebelen said. “I’m proud of my degree. I learned a lot of things in college, and I think my education was an investment. I just don’t think I really understood the burden I was taking on, because I was a kid. You’re not thinking about it then. You have to finish. You don’t have a choice.
Many say it’s a bubble threatening to burst. We have a generation starting out in the red and struggling, in some cases for decades, to pay their way out.
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