Valley Interview : CSUN Aid Director Says Federal Cuts Will Teach Wrong Lesson

At a time when college costs continue to rise--and with many families finding it tougher than ever to pay the bills--Republican leaders in Congress are seeking to cut federal financial aid programs to trim the deficit.

Republican lawmakers are debating whether to eliminate the current interest exemption on the main federal student loan program, shifting the responsibility from the government to students for paying the interest that accrues while they are in school.

The change would, if enacted, add 20% or more to the monthly costs for undergraduates once they leave school and up to 50% more for graduate students, educators say. There’s also talk of cutting loan and grant funding, and denying aid to students who are legal residents but not U.S. citizens.

The debate is causing alarm among college and university officials, who argue cuts in financial aid will deny higher education to more students. Affordability already has been strained in recent years, in part by a shift from grants to loans as the primary form of federal student aid.

In 1993-94, U.S. students received about $42 billion in total financial aid, with $31.4 billion or almost 75% from the federal government. California students received about $3.5 billion of the total.

Nationwide, more than half of all full-time college students receive some financial aid.

Diane Ryan, who took over as the financial aid director at Cal State Northridge this fall, has worked in the student aid field for two decades. She came to Northridge after serving in the same position at Cal Poly San Luis Obispo.

Ryan estimates attending CSUN as an undergraduate costs more than $10,000 a year--including tuition, room and board, and other expenses. She talks about how the possible federal changes would affect students and their families.

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Question: Can you summarize some of the major proposals being discussed in Congress for changes in federal student financial aid programs?

Answer: I think the most significant proposal is the elimination of the in-school interest subsidy on student loans. I think this will have a tremendously far-reaching impact on students and will dramatically affect the cost of education.

Q. What else?

A. The other proposal being discussed is the elimination of a number of financial aid programs that have been in existence for a long while--the campus-based aid programs, which are the federal work-study program, the Supplemental Educational Opportunity Grant program and the Perkins loans. Those are among the programs being considered for flat-out elimination.

Q. What is it about these proposals that disturbs you the most?

A. I think we already have a tremendous shortage of adequate funding for students. We’re still an affordable institution. But with the California budget being what it’s been, and our increasing fee structure, we have a tremendous need for funds. I think the most troubling aspect of this is we’re going to see some real changes in access to higher education.

Q. What do you mean when you say there’s a shortage of funds?

A. Students’ need for funds far exceeds what I have to deliver. And most of the time, when I can meet a student’s financial need, it’s with an alarmingly increasing amount of loans. So the elimination of the campus-based aid program would take away vital forms of assistance that keep student loan debt down.

Q. Can you quantify the difference between availability and demand for student aid funds?

A. When I did some modeling last fall on a select group of students from a special educational equity category here at Northridge, and took a look at what kinds of aid packages we had given them, for 26 students there was a need for an additional $140,000 total if I was going to fully meet their need.

Q. The discussion over the cuts in Congress centers on cutting the federal deficit. What do you say to that?

A. I would challenge them to look into the face of a freshman student coming to campus and saddle them with the burden of worrying about the federal deficit. Eliminating an interest subsidy for them to go to college does not seem to me to be an equitable way for us to prepare our citizens for the future, or make them into taxpayers of any substance. The reality is it seems rather unfair to put a disadvantaged population in the position of being the ones to make the amends.

Q. What do you mean when you say disadvantaged population?

A. The bulk of those we assist here are students who come from families with expected contributions of zero under federal guidelines. There’s no family money to put toward meeting educational costs. We’re dealing with increasingly needy families and increasingly needy students coming to our doors, not only at Northridge, but throughout California and the nation.

Q. Some in Congress have said removing the current loan interest exemption only would mean a $20- to $40-a-month increase in students’ loan repayments after they graduate. Some have said that isn’t a lot of money?

A. What we’re doing is really expanding the interest on student loan debt that already is staggering. This significantly adds to the cost of borrowing for education. And we’re already looking at student loan debts that are pushing out to 10, 15, 30 years of repayment.

We’re affecting the ability of students over time to consider other kinds of credit involvement, such as decisions about buying homes and what kinds of jobs they can take; $20 to $40 a month can be a lot of money to some of the students today who are entering the work force with relatively low-paying positions.

Q. Is the debt obligation of a student graduating today different from that of those graduating 10 to 20 years ago?

A. Absolutely. We’ve seen a reversal of loan-to-grant ratios. Ten years ago, students were going into college and having their way paid with two-thirds grants and one-third loans. The reverse is true today. You can see the average borrowed indebtedness of students has been steadily climbing.

At my previous institution four years ago, students graduated owing about $7,000. As of last year, students graduated owing about $13,000. This can even affect your choice of a mate. I know of instances where students have been reluctant to pair with a fiancee who’s got a huge student debt because the combined debt picture can be dramatic.

Q. I’ve heard some talk about the changes in financial aid and college costs translating into students today having a different kind of college experience?

A. For many students, I clearly don’t think the college experience today is anything like the college experience that a number of us had 25 years ago. For one thing, the amount of work that students have to be involved with is significant. This changes the relationship with the institution.

We also have many more commuter institutions now than we used to. The traditional scene of packing the son or daughter off to college, that’s still happening some. But for many students, that’s not the experience. They are working their course work in, amid demanding employment schedules and family obligations. This is a different world.

Q. What do you tell parents about the kind of financial aid scenario they can expect in the coming years?

A. If the mood does not change, with what we will expect from tomorrow’s students in the way of contributions, clearly more dollars are going to be borrowed to finance education.

We’ve also created a sense of frustration. Meeting the cost of college attendance is clearly outside the reach of a number of families. They could not possibly save enough for their sons or daughters. Because of recent economic trends and reversals, the reserves are just not there.

Q. Looking at the financial aid picture overall, are there any bright spots out there?

A. There is a bit of a bright spot. I think students know there is financial aid now. A few years ago, we did not have a very well-educated populace about the availability of aid programs. I think that has dramatically and positively changed. The aid programs have become very widely known. But that has created a demand we can’t fill.