Michigan student debt peaks at $29,450, study finds
Sixty-two percent of students in Michigan graduate with debt of about $29,450 — making the state the ninth-highest in the nation for student debt — according to a new report from the Michigan League for Public Policy, a nonpartisan economic policy institute.
The report pointed to several possible reasons for the debt, including rising tuition and stagnant levels of federal and state aid.
Since 2003, public tuition has increased by 100 to 150 percent on average in Michigan. Meanwhile, in 2003, the Pell grant covered 40 to 66 percent of tuition. Now, the grant covers less than 40 percent at nearly all Michigan universities. At the University of Michigan specifically, in 2015, the federal Pell grant covered 26 percent of tuition.
Michigan’s investment in need-based financial aid grants has also fallen since the 1990s, even amid raising tuition. The state spends less per student on financial aid than most other Midwestern states, spending just an average of $223 per undergraduate full-time equivalent student. The state also only spends 42 percent of the national average on financial aid grants per full-time student.
When it comes to the other side of the equation — tuition — the University announced a 3.9 percent tuition increase for in-state undergraduate students this summer, which corresponds to an increase of $546 per year. This is similar to increases in past years.
However, University graduates leave with less debt compared to those in the state. 45 percent of University students graduate debt-free, and among those who have debt, the average is $26,510.
University of Michigan Provost Martha Pollack emphasized the University’s pledge to meet the financial needs of in-state students. She cited the University’s commitment to providing better services to students as an explanation for rising costs.
“If people want a world-class faculty, you have to pay for world-class faculty,” Pollack said.
She also pointed to inflation costs and raising funds for financial aid, as well as as the commitment to providing an improved education, as the three main reasons for tuition increase. However, she also stressed the difference between the sticker price of tuition and the amount actually paid by students, saying the number is not an accurate indication of affordability because of the amount of aid provided.
Overall, about 70 percent of in-state students receive some kind of financial aid, according to Pollack. This year’s proposed increase in tuition includes a 10.8 percent increase in need-based grant aid — as of this year, the University has gone seven years with no increase in full-cost attendance for in-state students in need, Pollack said.
The High Achieving Involved Leader scholarship, a need-based scholarship program launched by the University last year, is one of the new programs that will be funded by the increase in tuition. The program provides a select group of low income, in-state students with four years free of tuition.
Beyond individual choices to raise tuition at universities and stagnant financial aid from the state and federal government, state funding to universities also plays a large role in determining college costs and subsequent loan burdens for Michigan students.
In 2011, Gov. Rick Snyder (R) announced a 15-percent cost cut of in-state public university funding across the board, cutting funding specifically to UM by 21.6 percent. The most recent $16 billion education budget, for 2017, allows for a 2.9-percent increase in funding to public in-state universities but doesn’t quite return to the pre-2011 levels.
Peter Ruark, a senior policy analyst at the Michigan League of Public Policy, said the decrease in state funding may be a “slow privatization” of Michigan’s public university system.
“It’s a big mistake to disinvest in education,” Ruark said.
CSG Vice President Micah Griggs, an LSA senior, said the constant increase in tuition taints the struggling student’s college experience.
“Students at the University of Michigan and nationwide are graduating college with more and more student loan debt and it does have an effect on our college experience,” Griggs said. “Decisions such as what classes to take, what student organizations to join and how to support yourself financially while on campus is becoming harder.”
Pollack also charged that most coverage of rising costs hasn’t acknowledged that the University is below the national average annual tuition cost, and that UM graduates are above the national average in earnings post-graduation.
“These newspaper stories are fixated on the sticker price, and our strategy is to try and have people pay a lot less if their families have less money,” Pollack said. “What you need to look at is what people actually pay.”
Correction: Due to an editing error, a previous version of this article incorrectly stated Pollack spoke in response to the recent report. Pollack was not speaking directly in response to the report. The story has also been updated to add more University-specific information on student debt.