A recent CollegeBoard survey showed tuition is still rising, but at a lower pace than reported during the past five years. Also, growth in student borrowing slowed, but more students are turning to private loans.
University of Oregon tuition – including “hidden” programmatic resource fees – is the highest within the Oregon University System and slightly higher than the national in-state average of $6,185. That is a 6.6 percent increase from last year’s average.
Jay Kenton, OUS vice chancellor for finance and administration, said this finding is not surprising.
“I think that around the country Oregon might have been the first to have budget problems, but many states have gone through the same thing we have,” Kenton said. “Around the world, governments are struggling to fund all the things they have to fund, and one of the things that typically gets cut is funding for higher education.”
From 2001-05, OUS lost about 20 percent of its state funding, Kenton said – funding that was already low compared to peer institutions. Only now is OUS slowly being refunded.
Private loans, also called alternative loans, are an increasingly popular choice for students. A private loan is one whose funds are not supplied by the federal government.
Private lenders have begun cutting out the middleman – the financial aid office – and advertising directly to families via television commercials in an effort to draw students. Elizabeth Bickford, director of student financial aid, said she recently told an inquiring mother private loans are often more than the student bargained for.
“Private loans have higher interest rates,” said Bickford. “Eventually all loans go into repayment, and it’s at that point that it can become difficult to manage the loan payment, with everything else that the student might be trying to do after graduating.”
Bickford said because students are reluctant to visit the financial aid office for advising, they often are unaware of the fine print of private loans.
And because the loan process for private lenders tends to be simpler than the federal government’s, students sometimes over-borrow. If a student can borrow up to $40,000 from a private lender but it costs him or her only $18,000 to attend a public university, the student may be tempted to take out the full loan anyway. Then he or she is hit with astronomical debt upon graduation.
The University is a direct lender, meaning it cuts out the private lender. When students take out a loan through the University, they are effectively taking out a loan through the federal government.
Bickford said private loans should be taken out primarily to fill gaps left by the federal government.
“It’s really important for students who are making these decisions to really understand what they’re getting into with these loans,” Bickford said.
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