Financing a future

Despite rising costs, a recent study found a college education is still worth the investment. Indiana State, with its legacy as a leader in keeping college affordable, is doing more than ever.




When Ashley Borhart was a freshman attending new student orientation, she learned about Indiana State University’s Sycamore Graduation Guarantee and immediately knew it was for her.

Ashley Borhart is taking advantage of the Sycamore Graduation Guarantee, which assures students who meet certain requirements will complete a bachelor’s degree in four years or any remaining classes will be tuition-free.

Ashley Borhart, left, is taking advantage of the Sycamore Graduation Guarantee, which assures students who meet certain requirements will complete a bachelor’s degree in four years or any remaining classes will be tuition-free.

Actually, you might say Borhart and her parents jointly concluded it would be in her best interest to take advantage of the guarantee, which assures students who meet certain requirements will complete a bachelor’s degree in four years or any remaining classes will be tuition-free.

“I could see my mom looking over at me like, ‘You’d better sign that,’” Borhart said, noting that her dad also attended orientation and both parents influenced her decision. “It has no down side for the student. There’s nothing to lose by signing up. You don’t have to pay extra for it and it could save you money if you end up having to stay an extra half year.”

Launched for incoming freshmen in fall 2012, the Sycamore Graduation Guarantee is just one way Indiana State is taking action about something students, parents, educators and political leaders have been talking about for years — ensuring that a four-year college degree is affordable.

More than 1,500 students signed up for the guarantee during its first two years, and more than 50 percent remain in the program, according to Susan Powers, associate vice president for academic affairs. While there was some attrition in the first year, nearly every student who took advantage of the guarantee last fall as a freshman is still covered by the guarantee this fall, she said.

Susan Powers

Susan Powers, associate vice president for academic affairs at Indiana State

Because the guarantee ensures students will get the courses they need to finish in four years, it has helped about 80 students get into sequential classes they needed, Powers said. The program has been especially helpful in such intensive majors as athletic training, where students need a critical course in their first semester, she said.

Beginning in 2014, nearly every incoming student will be automatically eligible for the guarantee, “but we are still asking students to confirm their participation in the program so that they understand their responsibilities,” Powers said.

Also new this fall, is a four-year degree map required by new state legislation.

By taking the lead two years ago on a four-year graduation guarantee, Indiana State is way ahead of other colleges and universities in implementing a new planning tool in the widely used Degreeworks software — not only in Indiana, but also nationwide, Powers said.

“We are easily a year and a half to two years in front of everybody else on using the degree maps, having training across the campus and making sure that everyone understands what a critical course is and having four-year plans developed,” she said.

Indiana State staff member Cindy Otts, associate registrar, has served as a consultant in degree mapping for universities across the country, Powers noted.

For Borhart, an operations and supply chain management major in the Scott College of Business, the graduation guarantee took on more significance when she changed her major during her freshman year.

“It’s great to have that cushion in case something happened and I couldn’t take the classes that were offered,” she said.

Other initiatives

Even before the Sycamore Graduation Guarantee, Indiana State was tackling affordability head on. President Dan Bradley pledged in 2011 that the university would work to hold future cost increases in all areas — not just tuition — to increases in the cost of living. An affordability task force produced such initiatives as expanded use of electronic textbooks, a greater commitment to energy awareness and conservation and more opportunities for student employment.

Indiana State has the lowest tuition among the state’s four major research universities, and its total cost of attendance is among the lowest of any four-year institution.

Crystal Baker

Crystal Baker, director of student financial aid at Indiana State

The university is also a leader in providing “a world-class financial aid package,” said Crystal Baker, director of student financial aid.

Students benefit from about $12.7 million in merit scholarships each year, and Baker’s office processes about $118 million in need-based aid annually.

“Indiana State is very accessible as long as students apply on time,” Baker said, recommending that students apply no later than Dec. 1 of their senior year of high school and complete the Free Application for Federal Student Aid by Indiana’s March 10 deadline.

New for students this fall is a customized award letter that breaks down gift aid — scholarships and grants — and compares that assistance to the cost of attendance.

“Then, if there is a gap between the cost of attendance and financial aid, we talk about how we finance that,” Baker said. “For the first time, we talk about choices, such as whether students need to live in premium housing if they are taking loans to finance their education.”

Also this year, students will see a projection of their student loan payments after graduation.

Most students find that an Indiana State education is affordable, Baker said. While loans make up an important part of the college financing package, the typical Sycamore borrows about $6,000 per year, generally in the form of a federal loan rather than a private loan so that interest rates are lower and payments more affordable.

The changing faces of federal, state aid

Indiana State has a legacy as a leader in keeping college affordable. The nation’s first statewide student financial aid association was formed in Indiana in 1935, and Harry Elder, Indiana State’s registrar, served as its president the following year.

It would be another 10 years, following the end of World War II, when federal student financial aid began with the Serviceman’s Readjustment Act that provided returning GI’s with assistance to attend college. The space race with the Soviet Union led to the National Defense Student Loan, precursor of the Perkins Loan, and the first federal low-interest student loan program.

The Higher Education Act of 1965 authorized most federal financial aid programs we know today. The Basic Educational Opportunity Grant (origin of the Pell Grant) was added in 1972 and became the foundation on which all other aid was awarded.

As baby boomers reached college age, demand skyrocketed for more campuses, more classrooms and more residence halls, and growth continued as a college education became even more important. By 2013, there were 6,900 accredited institutions of higher learning in the U.S., more than three times as many as in 1950. In 1970, there were 5.9 million students in college, compared to 22.7 million today. In 1970, tuition at public universities averaged $358 per semester. Adjusted for inflation, the cost per semester in 2010 would have been $2,052, but it was actually $6,695.

John Beacon

John Beacon, vice president for enrollment management, marketing and communications at Indiana State

“Despite the fact college costs have risen faster than inflation, public education remains popular, and it remains a good investment,” said John Beacon, vice president for enrollment management, marketing and communications at Indiana State.

The true cost of tuition at a public university is closer to what an out-of-state resident pays, according to Beacon.

“College remains affordable, because public higher education is heavily subsidized by state appropriations and federal financial aid,” he said.

But states are subsidizing higher education less than 40 years ago, he noted. According to the Department of Education, states on average picked up 60 percent of the tab for public colleges and universities in 1975, while families paid 33 percent and the federal government paid the remaining 7 percent. Today, states are paying approximately 34 percent of tuition, while families are paying about 50 percent and the federal government about 16 percent.

While the federal share has risen, more of Uncle Sam’s assistance now comes in the form of loans rather than grants. In 1981, loans accounted for 45 percent of federal aid and 52 percent came from grants. By 2000, loans accounted for 58 percent of aid and grants 41 percent. While federal Pell grants remain important, they now cover the smallest portion of college costs in the program’s history.

Ed Pease is a member of the university’s board of trustees, former administrator at Indiana State, former state senator and two-term Congressman.

Ed Pease is a member of the university’s board of trustees, former administrator at Indiana State, former state senator and two-term Congressman.

“Out of a real desire to help students, the federal government just kept raising the amount it would loan to students or give them in grants,” said Ed Pease, a member of the university’s board of trustees, former administrator at Indiana State, former state senator and two-term Congressman. “There are those who say that because there was no downward pressure on the cost of higher education and because everybody understood that the federal government would just keep raising the amount they would loan, universities did not see it as imperative to keep (increases in) costs close to inflation.”

In 2013, Americans were working more hours, had more debt and were spending more of their income on a college education than at any other time. Yet Americans continue to attend college in record numbers. According to the Bureau of Labor Statistics, tuition consumed 4 percent of median family income in 1970. Today, the figure is 11 percent.

“The reasons for these increases are complex,” Beacon said. “In part, it is because of institutional infrastructures that include the cost of utilities, the cost of employee benefits and the need to keep up with technology.”

Economic downturns such as the Great Recession of 2009 have also had an adverse impact on the costs of an education as state subsidies to colleges and families’ ability to pay decline, he said.

Despite the cost, a college education is still worth the investment, a recent white paper by the Federal Reserve Bank of New York concludes. The paper, written by two bank economists, found that the rate of return for a bachelor’s degree has been around 15 percent per year since 2000.

“Quite aside from earning power, a college education can make lasting changes in peoples’ lives,” Beacon said. “People with a college education tend to live longer, enjoy more leisure time, are more likely to be engaged in their communities and make more informed decisions.”



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