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Student loan troubles

Observer Viewpoint | Tuesday, August 29, 2006

The student loan problem has gotten so bad that several major universities, not including Notre Dame, are finally doing something dramatic about it.

According to the National Student Loan Survey, average undergraduate loan debt in 2002 was $18,900, up 66 percent since 1997. Graduate students incurred an added $31,700 in average debt, an increase of 51 percent since 1997. Graduates of law or medical schools carried an average of $91,000 in total debt.

In response to the problem, several schools are using university funds to reduce or eliminate that loan burden for students with demonstrated need. Harvard does not ask parents earning less than $60,000 a year to contribute to their child’s education. At Yale and Stanford, the figure is $45,000. The University of Pennsylvania replaces loans with grants for students from families with incomes under $50,000. Virginia, Brown and other institutions are taking similar steps.

The most creative is Princeton University. In 2001, Princeton became the first university to replace loans with grants and a campus job for all students qualifying for aid. Six hundred seventy-four members (or 55 percent) of the entering class of 2009 received such aid. The average scholarship was $28,100, with $18,900,000 in total scholarship aid. The average family income of aid recipients was $93,950, with 225 below $40,000 and 124 more below $60,000.

Princeton is smaller than Notre Dame and has a much bigger endowment. Notre Dame’s excellent Financial Aid Office tries to help students, including an effort to reduce the loan portion of need-based aid by replacing loans with scholarships. But a major element continues to be the student loan. It is fair to suggest that Notre Dame should emulate the no-loan concept openly and aggressively. Notre Dame’s undergraduate tuition rate for 2006-07 rose 5.8 percent over last year for a new total of tuition and average room and board (TRB) of $42,137. The rate of increase is lower than in the previous three years, but it is higher than the 4.2 percent rise in the Consumer Price Index (CPI) from 2005 to 2006. While some belittle the use of the CPI to evaluate the rise of college tuition, the CPI does measure what it costs the students and their families to live. In 1978-79, before Notre Dame began its pursuit of Research Prestige, TRB was $5,180. Adjusted for inflation by the CPI, the TRB now would be $16,255 instead of $42,137.

The federal student loan program began modestly in the 1970s as a supplement to means-tested federal grants. It expanded as Congress succumbed to pressure from the universities to finance its research programs on the backs of the borrowing students. Notre Dame’s TRB began to skyrocket after it began to describe itself in 1978 as a “National Catholic Research University.” Notre Dame followed the lead of the major universities in using the expanding federal loan programs to finance its research enterprise. As the loan limits went up, so did tuition. The universities lobbied for higher loan limits, raised tuition again in response and so on. The process continues in varied forms today.

Recent studies, including one from last December by Allan Carlson of the Howard Center, document the obvious impact of student debt on marriage and childbearing. A national Creighton University study of young married couples, published in 2000, asked respondents to state 42 issues that “might be problematic during the early years of marriage.” For all respondents, “debt brought into marriage” ranked third. Among respondents under age 30 and among those married one year or less, it ranked first.

For very Catholic reasons, Notre Dame should be in the forefront in the war on student-loan debt. Heavy loans narrow a graduate’s career, marriage and family options. Examples abound of young lawyers compelled by debt to forego, or leave, lower-paying positions as public defenders, disability advocates and prosecutors. Alumni in other occupations could tell similar stories.

Our leaders’ pursuit of a Research Reputation has unjustly inflicted this loan burden on non-wealthy alumni of Notre Dame. Our leaders have a duty to relieve that burden at least for present and future Notre Dame students. Notre Dame should be a leader, not a follower, in affording its grads the freedom to choose to contribute to the common good in their career and family choices.

Professor Emeritus Charles Rice is on the Law School faculty. He can be reached at 574-633-4415 or rice.1@nd.edu

The views expressed in this article are those of the author and not necessarily those of The Observer.