Sam Krall left the University of Wisconsin in 2012 with a degree in biochemistry and $45,000 in student debt.
Krall, like many students, underestimated the cost of higher education in the United States.
According to finaid.org, the student loan debt in the United States currently amounts $1.2 trillion and counting. With a larger percentage of UW students now receiving financial aid and graduating with debt, the costs of college continues to live on even after graduation.
How much does college actually cost?
As of the 2013-14 school year, the cost of tuition with segregated fees for in-state residents at UW is $10,403, according to a UW Data Digest report. For out-of-state nonresidents, the cost is $26,653.
In addition to the cost of tuition, the report also factors in the costs of textbooks, housing and other miscellaneous expenses. As of 2013-14, these costs were estimated to be $13,819. Together with tuition, an in-state UW student pays almost $25,000 each year to go to school, and for nonresidents, the cost is more than $40,000.
“The expectation that I was given was that of my parents’ culture,” Krall said. “That I would be able to graduate from college, get a good job and be able to pay off my loans easily.”
Krall was left unemployed for a few months after graduating and his expectations, like those of many other students in the U.S., did not accurately reflect the reality of the costs of education.
A recent study done by the Brown Center on Education Policy at Brookings, “Are College Students Borrowing Blindly?” surveyed students at a selective public university during the spring 2014 semester. In addition to the 48 percent of respondents who could not guess the cost of their tuition, the study also used nationally representative data to find that roughly “half of all first-year students in the U.S. seriously underestimate how much student debt they have, and less than one-third provide an accurate estimate within a reasonable margin of error.”
“Half of all first-year students in the U.S. seriously underestimate how much student debt they have, and less than one-third provide an accurate estimate within a reasonable margin of error.” – Brown Center on Education Policy at Brookings
Higher tuition, more loans
“I was raised in a way where college was the only way to be successful, I wish there was more emphasis on other ways of doing things,” Krall said. “I wish there was more info on how much debt you’re taking on versus what money you’re making.”
In the last 25 years, UW tuition costs have increased by roughly 500 percent. In comparison, the median household income in Wisconsin has increased just 67 percent in the same timeframe.
Noel Radomski, director and researcher for the Wisconsin Center for the Advancement of Postsecondary Education, said the slow income results from outsourcing and higher productivity in manufacturing jobs in Wisconsin.
“With [a drop in wage growth], plus with the tuition increase, you see Wisconsin’s families paying a larger percentage of their income to higher education,” Radomski said.
Radomski said one effect of the heavier burden on families is they may consider other schools in-state such as UW-LaCrosse or UW-Whitewater, where tuition costs are cheaper, or two-year colleges like UW-Baraboo.
“… you’re seeing some data showing that more students are going to a two-year college for their first or second year, frequently in their own community,” Radomski said. “Tuition is cheaper and if you stay home you don’t have housing costs, like you do if you come to UW-Madison.”
Similarly, as tuition costs increased and a larger chunk of income started going toward school, the number of UW students applying for and receiving financial aid rose too.
During the 2012-13 school year, 61.3 percent of UW students received some sort of financial aid. The number of students graduating with debt that year was about 52 percent, where it currently remains, up from 43.6 percent a decade ago.
According to the Office of Student Financial Aid, the current average debt of a UW graduate in 2014 is $27,711, just below the national average of $28,400.
Is school becoming less of a public priority?
Radomski said one cause behind recent tuition increases has been a decrease in funding from the state. According to a report by the Wisconsin Legislative Fiscal Bureau, tuition revenue now accounts for a larger percentage of UW’s 2014-15 budget, 22.1 percent, as opposed to state funding, 19.3 percent.
The reduction in state funding goes back to a decrease in tax revenues from the Great Recession of 2007, Radomski said.
“We had a double whammy of reduction of tax revenues and then increases in expenditures,” Radomski said. “What happens then is most Legislatures say, well higher education, we can find a substitute for tax revenues, and that substitute is tuition. You can’t do that with other state agencies, like corrections; you don’t have the option of getting money from inmates.”
While a shift in state funding has always been a result of a financial recession, Radomski said, unfortunately it is now permanent.
Susan Fischer, director of UW-Madison’s Office of Student Financial Services said the state’s financial aid grant, the Wisconsin Grant, has remained at the same level while the number of applicants has increased.
According to the 2013-14 Data Digest, the grant was $5,801,223 in 2009-10 with 2,716 recipients. In 2013-14, the grant was $5,672,641 with 3,183 recipients.
“There are more students who need the money. Even with the tuition freeze it doesn’t work out,” Fischer said. “Everyone gets less in their bowl.”
“There are more students who need the money. Even with the tuition freeze it doesn’t work out,” Fischer said. “Everyone gets less in their bowl.”
Fischer said in the last 15 years she has been at UW-Madison, funding has been more dicey. She said the grant used to cover from two-thirds to three-fourths of the total cost, including non-tuition costs. Now it covers less than 20 percent of tuition.
Trying to keep tuition costs down, the state has adopted an in-state tuition freeze in the last binding budget and is proposing to do the same in the most current budget. However, Radomski said this freeze creates a “triple whammy” by forcing an increase in non-resident tuition costs.
“You can only increase out-of-state undergraduate tuition so far until you start losing students coming here to Madison,” Radomski said.
One alternative to raising out-of-state tuition costs at UW is considering a separate increase for international students, Radomski said. Other universities have adopted differential costs for international students without a drop in enrollment numbers, he said.
With less state funding, however, Radomski said the university might soon have to make the choice between increased tuition costs or spending and faculty cuts. So long as wage growth and tax revenue is down, UW’s funding issues just aren’t the public’s first priority.
“It’s just not a public demand,” Radomski said. “Students don’t vote as a high percentage and in Wisconsin. Looking at the demographic, it’s old adults and they frequently lobby for things they want, like Medicaid. There isn’t that electoral demand on legislators or the governor to say this is a higher priority than transportation or Medicaid or corrections.”
“It’s just not a public demand,” Radomski said. “Students don’t vote as a high percentage and in Wisconsin. Looking at the demographic, it’s old adults and they frequently lobby for things they want, like Medicaid. There isn’t that electoral demand on legislators or the governor to say this is a higher priority than transportation or Medicaid or corrections.”
Fischer said she does not expect much change from the focus of state and federal legislators, and the university will continue to rely on the generosity of donors.
“We’re still putting pressure,” Fischer said. “I think there’s always more demand than supply, that’s always been the case.”
Krall said he was fortunate enough to have recently been hired for a new position at a pharmaceutical company, and because he did qualify for financial aid and his loans were covered, he has relatively low interest. He expects to have paid of his debts three to three-and-a-half years after graduating.
“I feel like I personally really lucked out, both that I majored in biochemistry and that I got a new job pretty recently that pays me pretty well,” Krall said. “If you’re making more money, take it on. If not, it can kill you for the next 20-30 years.”
