A University of Central Oklahoma finance professor says the increasing cost of borrowing to pay for higher education has negative long-term economic effects.
Randal Ice spoke to lawmakers during an interim study requested by state Rep. Emily Virgin (D-Norman) and state Rep. Cory Williams (D-Stillwater). Their districts include the state’s two largest institutions of higher education.
eCapitol’s Shawn Ashley reports Ice told the House Higher Education and Career Technology Committee last week student loan payments reduce an individual's and family’s discretionary income, and how much they can contribute to their retirement accounts. That then affects how much money they'll have available once they stop working.
Ice, who said he was spoken with college students about their borrowing and other financial habits, reminded the lawmakers that students directly receive the balance of grant and loan money after tuition, fees and books are deduced for living expenses. "And every used car dealer in Edmond knows when these checks go out," he said. Ice said an estimated 41 million Americans owe $1.2 billion in student loan debt. Ten percent, he added, will default in the first year after beginning payments. The largest share of those comes from for-profit institutions, which account for 50 percent of all student loan debt. Ice criticized for-profit schools, noting many of their programs are substandard. As a result, many schools, including UCO, will not accept credits from them. "These schools are convincing students to borrow money for an over-priced education that isn't any good," he said.
Ice also said student loan debt can reduce home equity, which is often a source of long-term health care funding.
Lawmakers also heard from vice presidents of enrollment from both the University of Oklahoma and Oklahoma State University, who said both schools have programs in place to educate students and parents about financial aid and the cost of student loans.
About half of all students graduating from OU and OSU owe some student loans.
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