Students drowning in debt across Virginia

Illustration by Dan Nacu.

Sarah King
News Editor

While a partisan stalemate over Gov. Terry McAuliffe’s proposed budget for fiscal year 2014-15 trickled along in Richmond this spring, a much more straightforward trend washed over the whole state of Virginia: tuition and fees for state-sponsored institutions increased across the board.

Due to the political impasse in the Virginia General Assembly, public institutions had to pass their budgets not knowing how much funding the state would allocate them for the first time since 2006. Despite this inconvenience, institutional ruling bodies began approving finalized budget plans and tuition increases for state schools in May.

“We didn’t count on any new funding,” said Pamela Currey, the associate vice president for finance and administration at VCU. “The Board assumed the state would give us what they gave us last year. That way when the budget crisis hit with the stae we weren’t harmed by it  because we hadn’t counted on it with our budget.”

At a 3.3 percent increase for in-state students, VCU saw the smallest hike in tuition and fees out of the major research universities in Virginia. The increase at the University of Virginia was 4.3 percent, 4.8 percent at George Mason University and 4.9 percent at Virginia Tech.

The increase puts tuition and fees for in-state students at $12,398 in the upcoming school year making it the fourth most costly state-school behind the College of William and Mary, Virginia Military Institute and University of Virginia. The approved budget for fiscal year 2014-15 also includes a new $25-per-semester library fee.

“This budget puts the university’s academic mission first, including recruiting and retaining our internationally competitive faculty and increasing student financial assistance,” said president Michael Rao in a press release.

He said the increase funds priorities in the university’s strategic plan which includes investing in digital learning and core curriculum improvements, shoring up maintenance reserves to improve and modernize university facilities and bringing in additional infrastructure to support academic success.

Policy makers in Washington are cognizant of the financial burden higher education places on an increasing number of students, however.

Sen. Mark Warner (D-VA) introduced a bipartisan education reform package on May 23 in the midst of the partisan budget deadlock in Richmond, and shortly after the Board of Visitors approved VCU’s finalized budget.

“What’s happening right now in many ways is we’re pricing middle-class kids out of higher education,” Warner said in a phone interview. “Even with grants, kids are being forced to take out a lot of loans and this is a growing problem in our country.”

The “growing problem” Warner cited is the existing $1.1 trillion in student loan debt that exceeds the total amount of credit card debt in the U.S. In an attempt to take action against the issue, Warner partnered with U.S. Sens. Marco Rubio (R-FL) and Ron Wyden (D-OR) to propose the reform package.

“Many young people are facing 50, 60, 80 thousand dollars in student debt after they finish their degree. Students borrowed $117 billion in federal loans last year. If this continues it’s going to be a problem for all of us,” Warner said.

Warner’s proposed reform package includes five legislative implementations to ease student-loan debt and make higher education more affordable. These include allowing Pell-eligible students to access the grant while still in high school so they can enroll in college courses, increasing career and technical education programs, implementing a bill that gives students and parents easy access to information pertaining to post-graduate employment, income-based loan repayment and creating incentives within the private sector to help employees pay student debts.

On June 9, Warner’s reform package took another step forward when he and Sen. John Thune (R-SD) introduced more bipartisan legislation: the Employer Participation in Refinancing Act. This legislation would allow employees in the private sector to repay their student loans with their pre-taxed income.

“I think this is going to be an area that’s going to receive more attention,” Warner said.

Although the Virginia General Assembly avoided a government shutdown when it agreed on a $96 billion state budget for 2014-16 biennium on June 23, VCU did not run the risk of assuming there would be a state-funded increase.

“We weren’t going to count on speculation, and we weren’t disappointed,” Currey said.

The university approximated that the state would fund about 29 percent of the university’s Educational and General Programs Budget (E&G) which comprises enrollment, resources such as faculty, federal and state funding and grants and contracts. Tuition and fees currently constitute 67 percent of the university’s E&G budget.

“Therefore, the core of our budget, including E&G program funds, reamined largely unaffected by the last-minute changes to the state’s budget. However, we anticipated receiving several additional appropriations (…) which were not included in the state’s final budget,” Rao said in an email to the VCU community on July 1.

In 2013 the state funded 36 percent of VCU’s E&G budget. The state has allocated 29.4 percent for 2014. Of the additional $15 million in anticipated appropriations, VCU only recieved about $4 million.

Rao said that due to an unexpected $1.5 billion shortfall in state revenue, the Commonwealth’s budget will be much leaner than was expected earlier in the year.

“You shouldn’t go broke just because you want to go to college,” Warner said.

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