OU officials address federal student loan controversy

Rolling Stone’s Matt Taibbi asserted in his August 2013 story, “Ripping Off Young America: The College-Loan Scandal” that the United States government stands to make an estimated $184 billion over 10 years from its new federal student-loan system, “paid for by hyper-inflated tuition costs and fueled by a government-sponsored predatory-lending program.”

In addition to accusing the government of abusing the new system, the article claimed colleges are to blame, as well.

Kevin Carey, of the nonpartisan New America Foundation, mentioned that colleges are paying too much attention to what he calls ‘”gliding’—pouring money into superficial symbols of prestige, everything from new buildings to celebrity professors, as part of a ‘never-ending race for positional status.”’

In light of the article, Oakland University Vice President of Finance & Administration John Beaghan assured in an interview that the school’s seven campus construction projects currently in progress are justified.

“Students and families expect and demand high quality higher education. They want quality faculty, facilities and programs. These are not cheap,” Beaghan said.

“As (it) relates to construction projects, Housing and the Elliott Tower have no impact on tuition; the Engineering Center is funded $30 million from the state and $45 million from bonds; the parking structure and upper-field renovation are paid from bonds. The bonds are paid from tuition/appropriation revenue but were needed to support very important initiatives.

“OU has the least square footage per student in the state, justifying the Engineering Center. Students’ biggest complaint tends to be parking, justifying the parking structure. OU has intercollegiate track and tennis teams that have no facilities—they were competing at high schools—justifying the upper field project,” Beaghan said.

Beaghan also noted that OU is wisely managing its costs: OU’s general fund expenditures per student in 2012 were $13,913, lower than both the state mean of $17,868 and median of $15,067.

Student Loan Advice

OU Director of Financial Aid Cindy Hermsen reminds students that loans are a choice.

“I always advise students and their parents to first exhaust all available funding and resources such as scholarships and grants and be willing to contribute toward the cost too,” Hermsen said. “Obtain a student loan as a last resort and only borrow the amount absolutely needed.”

All college students are required to complete an online loan counseling session before receiving the loan. The session covers the conditions of the loan, responsible borrowing and repayment options. OU also offers optional financial literacy workshops for current students.

Hermsen also went on to point out that students will save thousands of dollars by completing their degree within four years, with every extra year adding to the cost and taking away time that could’ve been spent already employed in their career.

“A student loan is a good investment in a future career as long as the student stays focused on their degree program, strives for academic success and if a loan is needed—borrow responsibly.” Hermsen said.

“The average student loan debt of an OU undergraduate student is about $20,000. That level of debt should be manageable. It is less than the cost of a new car.”