Survey data shows students struggle to navigate financial literacy amidst rising costs

Wednesday, March 8, 2017 - 1:28pm

More like this

A survey conducted by The Michigan Daily last month found 74 percent of student respondents at the University of Michigan think tuition is too high, and 54 percent believe the University doesn't give out enough scholarship money.

LSA junior Kim Truong, a second-generation immigrant and first-generation college student, said despite receiving a full need-based scholarship, she believes tuition at the University is too high.

“From my perspective, I think it’s very high-priced,” Truong said. “Although, I have the privilege of a full-ride scholarship — a need-based scholarship — which covers my tuition and housing, (without it) I definitely wouldn’t have been able to bear the costs at all. I think (the University) should start looking at structural changes to their policies. They're doing well in the grand scheme of things, but they should try to fix these issues.”

Rising Tuition

Last June, the Board of Regents approved a 3.9-percent tuition increase for in-state students and a 4.4-percent increase for out-of-state students for the fiscal year of 2017. This translates to in-state students paying $546 more per year and out-of-state students to paying $1,934 more per year.

At that time, several regents opposed the tuition increase, as they believed it failed to address the overarching issue of rising higher-education costs. One vocal critic at the time was Regent Andrea Fischer Newman (R), who said the increase in financial aid did not offset the overall rising cost of higher education.

“Whether it comes from the University of Michigan’s general fund or from the government, more financial aid does not solve the underlying problem of rising college costs,” she said. “It only makes the University of Michigan less affordable, especially for middle-class students and their families, who are least likely to qualify for financial aid.”

Pamela Fowler, executive director of the Office of Financial Aid, said there is a proportionate amount of aid given to students, but recognized it does not cover the cost of books, housing and other expenses.

“In the 20 years I have been here, for every chance there was an increase in tuition students on financial aid got an increase in their need-based grant equal to the increase in tuition,” Fowler said. “So they were held harmless on the tuition increase. Now that doesn’t mean they were held harmless on everything else — you have to pay for books, housing and you have other expenses.”

Last school year, the University also gave out the most financial aid in the state of Michigan, totaling $907,915,059 for the 2015-16 school year, according to the Office of Financial Aid all-aid chart Fowler provided. More specifically, $32,033,083 of it was need-based, $20,173,919 was merit-based and $15,691,139 was loans.

“We give out more financial aid than anybody in the state, probably more than anybody in the Midwest,” Fowler said. “But I can’t make it free for everybody.”

Truong, who is also on the executive board of the First Generation College Student Group, noted tuition could be cheaper if students were not required to pay for services not all use, like intramural building renovations, which cost students $130 a year.

“Little things like that add up,” Truong said. “It’s the difference between having the service available for you, and you not going to it because you don’t want to pay for it.”

Fowler said despite increasing what students have to pay, many of the smaller costs are necessary for giving students the services and resources they want.

“This is what students want,” Fowler said. “And now somebody who couldn’t pay for tuition in the first place now has to pay an extra $130 because this is what students want. So you have to think about these things. When you expect more and demand more, someone has to pay for it.”

Sociology Prof. Dwight Lang, who also advises the First Generation Student Group, doesn’t expect tuition to go down in the future without a resurgence in the economy and higher taxes to support education. Lang said with reduced state funding, the University has also accepted more out-of-state students to bring in more revenue.

“They have to raise tuition to make up the difference,” Lang said. “Another thing the University has done is recruit out-of-state students, who pay a higher rate, to make up the deficit. I don’t think tuition is going to go down. It’s dependent on tax revenue from the state of Michigan.”

Fowler said she thinks tuition is fairly priced when compared with other Big Ten schools, and offers one of the best overall educations in the country.

“Our tuition is high, but our cost of attendance is not that much higher than anybody else in the state,” Fowler said. “You look at other flagship universities, we are in the ballpark with everyone else. I don’t see why I have to justify what we’re charging. We give a very good education to everyone who comes here. It’s top notch.”

Challenges

Lang said roughly 26 percent of the University’s undergraduates come from families making $250,000 a year or more—so it made sense to him that 74 percent of the population surveyed believed it was too high. Lang said a big part of the population who think tuition is too high are middle-class students, whose families make just enough for them to not qualify for financial aid.

“(Middle-class students) may not be getting aid because their families make just a little too much,” Lang said. “They may not be getting as much aid as kids from lower-income families, so it’s an issue for them too.”

Another challenge nearly half of the first-generation students face is with work-study. Last year, the University awarded $2,458,500 in work-study, but only $686,491 was paid. Lang said work-study is an issue because it can take away time many students need to study.

“Obviously work-study takes away time from other things students do: socializing and studying; you have to factor that into your life here at Michigan,” Lang said. “Think about 10 hours you don’t have to study.”

Many of the first-generation students Lang advises graduate with debt, which is a burden once they leave school.

“No student likes to be in debt,” Lang said. “But first-generation students are usually working class, where debt and lack of resources are an issue, and it produces a certain amount of anxiety. Not all first-generation students are in this position, though.”

The Daily survey also found 23 percent of students don’t feel financially prepared for college. Despite hardships, Lang said the 14 percent of first-generation students at the University who are forced to think about finances during high school when they file their FAFSAs could benefit from learning how to be financially independent.

“From when I’ve talked to students over the years, they do fill out their own FAFSA,” Lang said. “I think that first-gens who have to do that work themselves during senior year of high school have to educate themselves on how they're going to make it. I think it’s the middle class, even the upper-middle-class students who haven’t had to think about finances. They realize their senior year they really need to learn this stuff because their parents handled their finances during college.”

Truong herself had difficulty when filling out her FAFSA because she had no help from her parents. Because of this, Truong said lower-income students, especially those who are first-generation, face several challenges when applying to school and for financial aid.

“Going through FAFSA was a little tough for me,” Truong said. “I’m a second-generation immigrant, and my parents couldn’t help me with FAFSA. I know the University can’t do everything for me, but I fear there are students who didn’t apply to Michigan because of the cost.”

In 2015, former president Barack Obama instituted a more streamlined application process, bringing the form's due dates in line with the college application cycle.

Truong said she would like to see better outreach to lower-income students from administrators to get their input before tuition is raised.

“I think a more humane and approachable way of getting this information across, especially with the first year, that would have helped me a lot,” Truong said.

When faced with challenges applying to school and getting aid, Truong said, the best solution is to be outgoing and not afraid to ask teachers and counselors for help.

“If your parents can’t help you like my parents couldn’t, seek out your counselors, the University and people who have gone to college,” Truong said. “I think the process of getting to college is a really exclusive thing and it’s hard to do without the help of others.”

On the topic of day-to-day expenses, such as groceries, coffee and food, 39 percent of students surveyed said they have a student job to cover these costs. A little under 20 percent use money saved from a summer job or internship, and 40 percent use their parents’ money.

Truong, like 39 percent of students surveyed, has had a student job since freshman year to make a continual income to cover her day-to-day expenses.

Fowler said while many students work to cover day-to-day expenses at school, like books, she does not believe it’s possible anymore for a student to pay their way through college without the help of their families, loans, scholarships or aid. It is also possible to work too much as a student, since going above a certain threshold of earnings prevents one from qualifying for financial aid.

“If you work too much, it actually works against you in financial aid,” Fowler said. “If you work too much, you won’t qualify for a grant from the government. You have to make sure you work, but not over that threshold.”

Going Forward

Students, according to Lang, will be essential in shaping financial policy at the University in the future. He said if students form groups, they can reach out to administrators about their concerns and making progress in facing student debt and other financial issues.

“As an issue here on campus, I believe students could become a force for getting the University to think about and to talk about student debt,” Lang said. “Asking the University what can it do — what should it do to help out those who are struggling financially.”

Fowler said students should be more cognizant of how much they spend on a day-to-day basis, and should spend an hour per week managing their finances.

“We say it every year at orientation, 'Spend one hour a week on your money,' ” Fowler said. “If you do that, you can manages your expenses and your money much better.”

Lang concluded it’s important for students to stay on task at school and to not be ashamed if they have to work in order to help pay for school.

“Only take out the loans you absolutely need to take out, and work for the rest,” Lang said. “Be very organized. And never feel sorry for yourself. Just buckle down, do it and don’t complain.”