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Student debt shot up with decline in state aid, group says
January 28, 2013
Anyone with a child in college probably won't be surprised by the findings of a new report: College has become less accessible for low-income and adult students since Ohio started trimming its need-based financial-aid safety net in 2009.
It also supports what we found in our three-day series in December about student loans and how it affects the credit reports of students who end up defaulting on those loans. The report, by Community Research Partners, urges Ohio officials to increase state financial aid in order to support state education and workforce-development goals.
"The fact that we now lag behind states with which we compete for economic development skilled workers has serious implications for Ohio's ability to attract and retain jobs and investment," said Bill LaFayette, an economist and the group's interim executive director.
It also hinders the ability of people to get better jobs and improve their standard of living, LaFayette said. And it impacts households, communities, and local and state budgets.
In 2009, the state cut about $181 million from the Ohio College Opportunity Grant, the state's top need-based grant program, by decreasing the amount of aid to students at the main public universities and eliminating aid to those enrolled at Ohio's community colleges and regional branches. Money was also taken away from student attending for-profit colleges until lawmakers reversed the policy in the 2012-13 budget.
As a result, Ohio dropped from being among the top 18 states in need-based aid per full-time undergraduate students from 2005 to 2008 to 35th in 2009. At the same time, Indiana, Kentucky, Pennsylvania and West Virginia remained in the top 10-20 states. And Michigan, which had ranked well below Ohio, jumped ahead, LaFayette said.
Not surprising as grant aid declined, many students took on more loan debt, he said. The average annual federal loan debt for first-time students at Ohio's two- and four-year public schools increased by at least 23 percent between 2007 and 2009.
The group recommends the state increase state funding for need-based aid, restore aid to students at two-year schools and come up with more innovative approaches so students from low- to moderate- families have enough aid and support services to complete a certificate or degree.