Why is Student Debt So High for New Hampshire's College Graduates?

Oct 20, 2016

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A report this week found New Hampshire is first in the nation, but not in a good way.

The annual report by the Project on Student Debt found on average, college graduates here in New Hampshire are racking up more student debt than anywhere else in the nation.

The analysis looked at seniors in the class of 2015, and found those who graduated from Granite State colleges and universities left on average with $36,101 in debt. (Read the report here)

The national average for the class of 2015 was $30,100. 

Thomas Horgan is president of the New Hampshire College and University Council, a nonprofit consortium of the state’s public and private colleges.

He joined NHPR’s Morning Edition to talk about the report and the issue of student debt.

This is the second time in three years the state has topped this list, but when you hear that number – $36,101 an average – what’s your reaction?

It’s a daunting number. It takes a pause, as you think about students trying to go onto college, trying to build the workforce of New Hampshire, trying to have an educated population. It’s a big number, and it’s a number that concerns families, it concerns students, as well as colleges and universities.

But why is New Hampshire always so high? Are there competing theories, or do you think it’s a straightforward issue?

It may be a perfect storm. There’s I think a lot of factors. Obviously, low state support for higher education is a problem, which results in high public tuition rates at our public universities and community colleges. 

We're the only state in the country that doesn't provide scholarship aid from general funds for students to go to college in-state at both public and private colleges.

  We’re the only state in the country that doesn’t provide scholarship aid from general funds for students to go to college in-state at both public and private colleges. I think we’re the only state in the country that allows local municipalities to tax private, non-profit colleges on parts of their property. We live in a very expensive part of the country to operate. Energy costs are high, other cost factors are high. And we educate a lot of students at private institutions in New Hampshire and throughout New England. With no state support to those institutions, students and families have to turn to their own resources and to student loans in order to make it affordable.

Are we seeing any effort on the part of colleges to look within their own organizations to find ways to cut costs?

Colleges are looking at cost cutting all the time. Plymouth State University just announced a 10 percent reduction in their force. New England College and Saint Anselm College both offered early retirement packages to long-serving faculty members. Throughout higher education you’re seeing efforts to control costs and reduce expenditures and for the institutions to work together in creative ways to reduce costs.

And yet they’re still trying to remain competitive, obviously.

Exactly, and it’s a very competitive marketplace, especially with demographics which are going down pretty dramatically throughout the Northeast. The K-12 pipeline is getting smaller, so the colleges are having to expand out where they’re recruiting students from. So we’re seeing students coming from farther away and the need to bring in students from out of state is a very competitive environment.

And it’s an expensive part of the country to live in.

Exactly.

Many people might just say colleges need to just cut their tuition, give families a break – is that simple?

You look at these numbers and you think these colleges have a lot of money, they must just be charging these outrageous tuition amounts because they can. That truly is not the case. At most of your public institutions, they’re charging even less than what it costs to educate the student and relying on out-of-state students who pay a higher rate to cover the cost. The private institutions are putting in more and more dollars into scholarship aid and financial aid packages in order to attract the number of students that they need in order to operate. Institutions are generally not operating generally in huge surpluses, and many are operating on the margins.

What impact does this increasing debt burden have on families?

Families are having to be better consumers. They need to be looking at institutions not only that they want to go to, but that they can afford to go to. They’re being more savvy about asking institutions to provide financial aid packages. And they’re negotiating more aggressively with colleges that a generation ago would not have occurred at all. And they’re increasingly looking, unfortunately, out of state at less expensive institutions as a viable alternative.

Families are having to be better consumers. They need to be looking at institutions not only that they want to go to, but that they can afford to go to.

We’ve heard about the idea of tuition-free public college for middle class families in the presidential election. Do any of the proposals you’ve heard sound realistic to you?

They don’t sound realistic to me. I think the dollar amount is going to be far in excess of what the federal government would be able to put up. But I do think the federal government is going to put a lot of pressure on state governments to maintain funding for higher education institutions, and I think there’s going to be federal incentives that will have to be matched by states to encourage more students to go on. I think Pell grants for instance, if you’re eligible for a Pell grant, it’s about $5,500, and that pretty much covers the cost at a community college right now. So for students with real need, community college is already free. We don’t really think about it in those terms, but in reality it is. As Pell grants may expand, more students may be able to take on less debt and other options may be provided such as incentives to business to help pay down student loans for new employees and other creative things are going to be looked at.

Long term, if college debt costs continue to rise, what happens to the industry?

I think you’re going to see some institutions get smaller. Some institutions may decide to partner with other institutions in different and creative ways. I think online education is probably going to become more popular; more students taking college level courses in high school, so that their time to graduation once they get to college can be significantly shortened. The less time you spend in college taking classes and paying tuition, the lower your debt is going to be. Consumers and colleges and businesses are all going to have to think about new and creative ways to have an educated population.