Michigan graduates struggle with the skyrocketing cost of college

Aug 21, 2019 at 1:00 am
The college experience lasts four, five, maybe six years. The debt? Decades!
The college experience lasts four, five, maybe six years. The debt? Decades! Shutterstock

When Marie Muhammad graduated from Wayne State University in December 2017, she was saddled with more than $50,000 in college loan debt. Making less $15 an hour as a lab technician after graduation, she could only afford to pay the interest that accumulated monthly. But even after landing a better job this summer as a registered behavior technician, Muhammad worries about her ability to make good on her payments.

"Hopefully it will help me put something toward the debt, but with health care insurance, I'm not too certain," Muhammad tells Metro Times. "Some have advised me to go back to school just so the payments will be deferred some more."

Muhammad is far from alone. The average student debt for a graduate with a bachelor's degree in Michigan is $31,700, a 46 percent increase from a decade ago, according to a new study by LendEDU, an online student loans marketplace. Michigan's average student loan debt is the ninth highest in the United States, where average student debt ranges from $19,742 in Utah to $38,776 in Connecticut.

About 58 percent of all students graduating from a four-year college or university in Michigan and the U.S. received a student loan to finance their education. In Michigan, that amounts to nearly 28,000 students graduating from college saddled with debt every year.

The rise in college loan debt stems from the ballooning cost of tuition; colleges were forced to increase tuition to cover funding gaps created by cuts in state subsidies. In the past decade, the average annual cost of tuition at a public university in Michigan rose 38 percent to $13,356 this year, according to the College Board and National Center for Education Statistics. This year, the state is spending $1.5 billion a year to help fund 15 public colleges, a 32 percent decline from a decade ago after adjusting for inflation, according to the Michigan Senate Fiscal Agency. Funding for the state's public universities range from $2,800 to $8,414 per student.

With student debt on the rise, many young people are putting off buying a home, a reliable car, and even getting married and having children.

According to the Federal Reserve, one of every five student borrowers is behind in payments.

About 60 percent of recent graduates have less than $1,000 in their bank accounts, largely because of student loans, according to Student Debt Crisis, a nonprofit group that supports making college free.

Frances Johnson LaMielle, who graduated with a master's degree from Michigan State University in 2013, is buried in $172,000 of college debt. With two children and a job that soon will pay about $38,000 a year, LaMielle doubts she'll ever be free of her college debt.

"I have loans that, frankly, I'll never be able to pay back entirely," LaMielle tells Metro Times. "I've come to this conclusion because despite my efforts, I have not gotten a job that pays a wage my credentials and experience warrant. Organizations are outsourcing and hiring part-time staff in order to cut costs."

Student debt varies

Generally, students rack up higher debt at private colleges because tuition is more costly.

In Michigan, students graduating from the University of Detroit Mercy have the highest average college debt per borrower at $48,755, according to LoanEDU. Albion College ranks second with an average debt of $40,347, and Alma College is third at $39,081.

More than 70 percent of graduates from those private colleges took out student loans.

Among public colleges, student debt was the highest at Ferris State University and Michigan Technological University at about $37,000.

Kuyper College, a private Christian school in Grand Rapids, has the lowest average student debt per borrower at $26,555. The University of Michigan-Dearborn ranked the second lowest at $26,909. The third lowest is Olivet College at $27,872 per borrower.

The University of Michigan ranked the fourth lowest with an average of $27,224 per borrower. Only 37 percent of University of Michigan graduates took out school loans — the lowest rate in the state.

At Wayne State University, the average student loan per borrower was $28,004, the fifth lowest in the state.

A growing crisis

About 44 million Americans owe a staggering $1.5 trillion in student debt, surpassing credit card and auto loan debt, according to the U.S. Department of Education. Outstanding student debt has nearly tripled in the past decade. In Michigan, 1.3 million people owe a combined $40.8 billion.

As of 2016, Michigan ranked fourth with the highest average student loan debt per capita at $5,330, according to Forbes. The top three states are Ohio ($5,700), Pennsylvania ($5,690), and New York ($5,570). The national average student loan debt per capita is $4,920.

For many graduates, student loans are becoming unmanageable. In Michigan, more than 12 percent of people with college debt are more than 90 days delinquent on their loans or in default, compared to 9.2 percent nationwide, according to the U.S. Department of Education.

The average monthly student loan payment is nearly $400.

By 2023, nearly 40 percent of student borrowers are expected to default on their college loans. Loans generally go in default after roughly a year of nonpayment, wrecking people's credit scores.

According to a Pew Research Center survey, 22 percent of college graduates with student debt said they're either financially struggling or "just getting by," compared to 11 percent of graduates who had no college debt.

In Michigan, more than 12 percent of people with college debt are more than 90 days delinquent on their loans or in default, compared to 9.2 percent nationwide.

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So is college worth the debt?

In Michigan, the median annual earnings with a bachelor's degree is $50,821, compared to $27,202 with only a high school degree, according to The New York Fed. About 28 percent of Michigan residents have a bachelor's degree.

People who struggle the most with student debt are college dropouts, says Sandy Baum, senior fellow for the Center on Education Data and Policy at the Urban Institute.

"If you went to a for-profit college for a year and borrowed $10,000 and left, now you're working at minimum wage or close to it," Baum says. "Those people struggle the most because they don't have a degree, but they have debt." Baum says it's critical for colleges to offer resources, such as tutoring, to reduce the dropout rate.

Free college anyone?

The struggle for many graduates to pay back their student debt is why college loans are a hot topic among Democratic presidential candidates.

Among the top contenders, Vermont Senator Bernie Sanders has the most radical and expensive plan, which would provide free college for everyone and erase all student debt. Under his "College for All Act," the federal government would provide funding to states to allow them to eliminate undergraduate tuition at public colleges. The plan would cost $2.2 trillion over a decade, which Sanders says would be offset by a Wall Street tax.

Massachusetts Senator Elizabeth Warren unveiled a similar plan that would eliminate up to $50,000 in student debt for roughly 42 million Americans whose household incomes are less than $100,000 a year. The $1.25 trillion plan would be offset by the Massachusetts senator's ultra-millionaire tax, which would be imposed on the 75,000 wealthiest families in America. She also supports free tuition at two- and four-year public colleges.

Several of the candidates are focusing debt-forgiveness plans on specific jobs, such as teachers. Former Vice President Joe Biden has proposed student loan forgiveness that "actually helps teachers." Former Texas Rep. Beto O'Rourke's plan calls for erasing student debt for teachers who have worked at least five years in a public school. In addition, he's calling for forgiving 10 percent of college debt for each year of work for public service employees.

California Senator Kamala Harris has proposed forgiving up to $20,000 in loans for borrowers who "start a business that operates for three years in disadvantaged communities."

Under former Secretary of Housing and Urban Development Julian Castro's plan, borrowers would not have to begin paying back their student loans until they are earning 250 percent or more above the federal poverty line.

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