Higher Education

DEBT WITHOUT DEGREE: Gaps in financial aid, funding contribute to growing number of Georgians with college loans and no college degree

State funding to Georgia’s public college system has dropped while student costs have shot up

Alduha Leon takes a quick break while setting up for the travel party he and his business partner hosted in Adair Park in Atlanta on Saturday night, July 29, 2017.

ATLANTA – Alduha Leon and Jared Sanders, roommates at Savannah State University, dined on hot dogs in their apartment on Thanksgiving Day of their sophomore year. They had decided to skip feasting with family in Atlanta to pick up extra hours at their airport jobs loading luggage onto planes. Payday wasn’t until Friday, though, and Leon only had $5 left on his food stamps card.

During the three years they spent at Savannah State, Sanders and Leon struggled to pay their tuition, fees and living expenses. They accumulated more than $50,000 in loans between the two of them, despite working up to 40 hours a week. After exhausting themselves working late or overnight shifts so they wouldn’t have to miss class, and finding their grades suffering, they both dropped out in 2015, joining a growing pool of Georgians who have debt but no degree.

More than 108,000 students who had taken out federal loans withdrew from Georgia’s public colleges and universities between 2013 and 2015, the most recent time period measured in federal data. The problem is particularly acute for those seeking a bachelor’s degree: Median federal loan debt for these Georgia students who withdrew has more than doubled over the last decade at most four-year schools, ranging from $5,500 at the University of North Georgia to more than $18,000 at Albany State University.

Without a degree, those who leave college often can’t get decent-paying jobs to make a dent in their loans, hurting their economic futures and that of the state as a whole. 

State actions have contributed to the growing financial pressures on students. Budget cuts during the recession caused per-student funding to plummet, so Georgia students and their families have faced rising tuition costs. The HOPE scholarship program covers less than it did six years ago, and fees – which can cost thousands of dollars a year – have increased. Regulations prohibit state colleges and universities from spending money from the Georgia budget on needs-based financial aid, and schools have limited campus-based resources to help.

This has happened as Georgia officials – like those in many other states – are pushing to increase the number of young residents who have some kind of post-secondary education. They say that by 2025, more than 60 percent of Georgia jobs will require such credentials, and today only 45 percent of the state’s young adults have them. But experts say dramatic improvement is impossible unless the government does something to make college more affordable.

“That can be funding the institutions themselves; it also can be investing in financial aid,” said Debbie Cochrane, vice president of The Institute for College Access and Success, a national nonprofit. “Folks aren’t just asking for higher education to be supported because it’s a nice thing. We know that our society, our workforce, our health – our societal health – requires that we have an educated population.”

Although Georgia’s tuition at public colleges and universities is relatively low compared to national averages, it has had some of the fastest growth. Since 2008, average tuition increased from $4,700 to $8,400. A December state audit found the annual average total cost of attendance grew 77 percent between 2006 and 2015, from $8,361 to $14,791, including mandatory fees and room and board.

Related: DEBT WITHOUT DEGREE: Students drown in debt despite a $524 million state surplus

Many legislators have introduced bills in recent years that would require the Board of Regents to keep costs down, by limiting tuition increases to not exceed inflation, for instance.

The state has hired the Southern Regional Education Board to examine affordability in Georgia’s higher education system and how efficiently universities are spending state funding. The research is being paid for with a $378,000 grant from the Bill and Melinda Gates Foundation. (The Gates Foundation is among The Hechinger Report’s many funders.)

The public has a perception that tuition is rising because schools aren’t managing their money well, said Claire Suggs, a senior education policy analyst at the Georgia Budget and Policy Institute. But the primary reason for the spikes in tuition and fees, she said, is declining per-student funding to the university system.

The recession in 2008 caused state tax revenue to plummet and accelerated a decline in higher education funding. State spending on the University System of Georgia fell from more than $15,000 per student in 2001 to about $6,000 during the recession, adjusted for inflation, and has only climbed back to about $8,000, Suggs’ analyses found.

Other financial measures also show the cost-shift to students. In 2009, state appropriations made up 61 percent of the general funding for USG institutions, while tuition accounted for nearly a third of it. By 2017, tuition brought in 46 percent of these schools’ general revenue, and state appropriations had shrunk to 43 percent.

“If we’re going to talk about affordability, we have to talk about the state’s investment in higher education,” Suggs said. “We have to acknowledge that there’s been this real disinvestment by the state.”

Many colleges agree, particularly those that face declining enrollments. “I don’t think there is a huge amount of waste on our campus,” said Kim Brown, senior associate vice president of business and financial services at Georgia Southern University. “Our operating budgets on this campus have not had an increase in more than 10 years, and staff haven’t had a raise in six or seven years.”

Leon and Sanders were caught in this downward trajectory, too. In their freshman year, 2012-13, tuition and fees at Savannah State were about $3,000 per semester, more than $800 higher than they’d been in 2009-10.

Leon, the first in his family to go to college, enrolled as a marine science major and was getting mostly As and Bs. He had a federal Pell grant for low-income students, but that barely covered tuition, let alone room and board, fees and books. His grades didn’t qualify him for a HOPE scholarship, so he had to turn to loans.

Related: The new North-South divide: public higher education

Georgia and New Hampshire are the only states without a need-based aid program for students attending state public schools. And Georgia prohibits its public colleges and universities from using state or tuition money on financial aid (whether merit-based or need-based). Schools must rely on their endowments and raising money from private donors to provide scholarships. Those with lower endowments and less affluent alumni have a harder time.

During the 2013-2014 school year, USG institutions awarded $28.8 million in need-based aid. Students’ unmet need totaled about $660 million, according to the Georgia Budget and Policy Institute.

An analysis by The Hechinger Report of 11 universities that make such data publicly available found that more than 83,000 students were determined by federal calculations to need help paying for school. Just two in 10 students received all the funding they needed through federal, state and institutional aid and loans.

Some students drop out when they can’t come up with their tuition and fees payments. In 2014 and 2015, about 13,000 students were removed – or purged, as officials say – from university rolls when they were unable to pay.

Other students may be able to make their payments, but have to take jobs to do so, which can make it harder for them to graduate. Working for more than 25 hours per week can get in the way of passing classes, especially for low-income students, according to a new study by the Georgetown Center for Education and the Workforce.

“The best thing that schools and states can do is make sure that students who can’t afford the cost of college have a reasonable path towards paying for school, so they don’t have to drop out and they don’t have to prioritize work,” Cochrane said.

Leon got a job at the Savannah airport. Breathing fuel fumes the first week made him so sick he wound up in the hospital and missed several days of class. Even when he was healthy, a draining work schedule – typically from 7 p.m. to as late as 3 a.m., Wednesday or Thursday through Sunday – made it hard to keep up with school.

He began dropping some harder classes, and his grades slipped. “The more I had to work, the more I went downhill,” he said.

He thinks a needs-based aid program is a great idea. “If it’s cheaper, people will take more initiative and go to school,” he said.

Georgia officials have been discussing a needs-based aid program for at least a decade. In 2008, a Board of Regents study estimated the state could feasibly establish a needs-based aid program for $40 million that would benefit 26,000 students. The report was published during the height of the recession, however, and nothing was done with its findings.

Related: States have cut money for higher education 17 percent since the recession

State Sen. Fran Millar believes Georgia needs to create some sort of needs-based financial aid program.

State Sen. Fran Millar, chairman of the Senate Higher Education Committee, views the coming college affordability study as a possible first step on the road to needs-based aid. He says creating such a program in a state where 17 percent of the population lives in poverty is vital for Georgia’s economic future.

“I don’t think anybody’s against it,” Millar said. “It’s just a question of where we’re going to come up with money. We have to look at our priorities.

“I think we’ll get there eventually,” he added, but said any needs-based program would likely have to include some kind of academic requirement, like maintaining a certain GPA.

Kelly McCutchen, president of the right-leaning Georgia Public Policy Foundation, recommends that the state look at providing needs-based aid for studies related to 11 industries identified as needing workers; or, he said, Georgia should do a better job of recruiting students to technical colleges instead of four-year schools where they’re likely to take on more debt to earn a degree that may not lead directly to a career.

“If you’re subsidizing that, you’re not really helping the student much,” he said. “I don’t think it’s one solution of ‘let’s just throw money at the problem.’ ”

The state does have a small, primarily needs-based aid program funded through public and private dollars, called REACH. Five low-income middle schoolers in most school districts – and eight in larger districts – can enroll.  If they keep up their grades in high school and meet other requirements – such as meeting regularly with a mentor and academic coach – they’ll receive a $10,000 scholarship for Georgia public colleges and universities.

REACH was launched in 2012 and currently serves 685 students. It’s slated to be expanded to more than 800 students next year.

In the meantime, it’s up to institutions to find money to help defray student costs. Valdosta and Columbus Universities are both in the middle of capital campaigns, some of which will go to needs-based scholarships. Clayton State and Savannah State are mimicking a successful program created by Georgia State that gives emergency grants to students who are close to graduation but needed a small amount, typically less than $1,000, to pay their final tuition bill.

Leon never made it to that point. By the end of his third year at Savannah State, he had earned just under half of the credits he would need to complete his degree and was already almost $30,000 in debt. He was starting to see older friends graduate and struggle to find jobs and pay back their own loans, despite having a bachelor’s degree.

“Do I really want to be $50,000 in debt?” he asked himself. The answer was “no.” He withdrew. Sanders did as well, for similar reasons.

Both have started their own businesses in the last year; Leon has set up an event planning company, and Sanders is establishing a video production business. They’re unable to pay back their loans right now, despite frequent calls from collection agencies.

They have no regrets about the decision to drop out and save themselves from even more debt. But both agree – they would go back if they could afford it.

This story was produced by The Hechinger Report in a collaboration with The Atlanta Journal-Constitution. The Hechinger Report is a nonprofit, independent news website focused on inequality and innovation in education. Sign up for our newsletter.

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