Data from the Office of the Commissioner of Higher Education points to growing financial problem within Montana’s education system. In 1992, the state appropriated $120 million to education, with the intent of keeping the rise of tuition throughout universities and colleges in Montana from experiencing a steep hike. The data from 2005, the appropriated amount for education was a confusing $7 million less than the 1992 funding, representing a 38% decline. Throughout those years, the Board of Regents utilized their power to raise tuition, directly impacting students and their ability to attend and subsequently pay for school. To reduce the prevalence of tuition increases, Montana government issued what is now known as a tuition freeze. Under this system, the states took on an equal responsibility to students regarding paying for higher education. Other states enacted similar guidelines to help offset the burden of rising tuition rates, and still follow those directives today. However, to safeguard an equal playing field among students and the state, funding requested by the OCHE would need to be included in the budget for the 2019 biennium. Instead, the governor proposed a budget that effectively fell short – to the tune of $25.5 million. Without the tuition freeze in effect, and the drastic cut to education funding throughout the state, students will make up the delta in education costs as universities and colleges, again, raise tuition. Lasting Implications for Students Students considering or currently in a degree program at an institution of higher education face difficult choices as it relates to footing the bill. Some may make the choice to work a part-time job (or two) in an effort to avoid taking on student loans to cover the cost; others may borrow through public and private student loan providers to pay the bill. In some cases, students may opt to forego college altogether because the cost of attending is simply too steep. Each of these choices students must make before and during a college career has lasting implications. First, students who work part-time jobs to help pay for the cost of higher education often end up doing themselves a disservice. Working even a few hours each week takes away time that could be spent taking an additional class or studying for an upcoming exam; missing these opportunities creates the need to stay in college for an extended period, which ultimately increases the total cost of attendance. Students who opt to pay for schooling by borrowing private or federal student loans also face an increased cost, albeit deferred. The majority of student loans are not paid while a student is in school, leaving a significant bill after the deferment period ends (six months after graduation or leaving full-time status). All student loans carry with them an interest rate, varying greatly depending on the source of the loan, which adds to the problem of repayment over time. And, there is currently no vehicle to refinance student debt with the Department of Education. The Federal Direct Consolidation Program does not actually help debtors to refinance to a lower rate. Instead, the consolidation loan assumes a weighted average interest rate. Although there are income-based repayment programs available to qualified borrowers that reduce the monthly payment due for recent graduates and low-income earners, interest continues to accumulate on some if not all student loan balances during that time. Moreover, some states have enacted state-level legislation to support a state sponsored student loan refinancing initiative. A situation is created where borrowers are forced to have their loans forgiven after two decades of repayment (a taxable event), or they struggle to make higher payments to offset the interest accumulation. Both scenarios burden student borrowers for what seems like a lifetime. Finally, when students feel as though the cost of attending school is too much of a risk, they simply won’t attend. In the current job market, a substantial portion of entry-level positions require some level of college education. Without a degree, individuals are left taking low-income or hourly wage jobs which may lead to a need for public assistance or taking on high-interest consumer debt. Without appropriations on the state or federal level, prospective and current college students in Montana face a nearly impossible challenge. As history has shown, lower government funding for education leads to an increase in the cost of attending a college or university, and ultimately, a vicious cycle for students. Being forced to work during college years, take out additional student loans, or forego a college education altogether gives students a bleak outlook on the future, and it prevents economic growth for years to come. Sources: 1. http://time.com/money/4586201/income-based-repayment-student-loan-forgiveness-cost/ 2. https://studentaid.ed.gov/sa/repay-loans/consolidation 3. https://lendedu.com/blog/refinance-student-loans 4. https://www.hesc.ny.gov/repay-your-loans/repayment-options-assistance/loan-forgiveness-cancellation-and-discharge.html
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