Know Before You Owe
By Emily McFarlan Miller firstname.lastname@example.org January 11, 2013 6:42PM
Student Bryan Lantz talks about college loans and debt with Sen. Dick Durbin and school faculty Friday at Elgin Community College. January 11, 2013 | Michael Smart~Sun-Times Media
Updated: February 14, 2013 6:44AM
ELGIN — U.S. Sen. Dick Durbin, D-Illinois, graduated from college and law school at Georgetown University with a wife and a baby and a second child on the way — and a $15,000 salary.
Durbin also graduated with about $8,500 in student loan debt, nearly 60 percent of that first year’s pay, he said.
To put that in perspective, he said, students today graduate on average with $20,000 to $25,000 in debt, he said. That means they’d have to make $45,000 to $50,000 their first year out of college for their debt to be as manageable as his had been — what he thought then he’d never be able to pay back.
When the senator read “startling” statistics like that, that student debt had grown to a trillion dollars, that it had grown faster than any other form of debt, and when he heard “heartbreaking” stories from students about the effect of that debt, he was inspired to introduce the Know Before You Go Act of 2012.
And when he read about Elgin Community College’s loan counseling program, he said, “I wanted to hear about it firsthand from the people working on it and the students.”
That’s what brought Durbin to Elgin Community College, where he held a roundtable discussion with President David Sam and members of the college’s financial aid office and board of trustees Friday in the Renner Academic Library and Learning Resources.
The senator also had visited the community college in August to discuss Deferred Action for Childhood Arrivals with students who planned to apply.
The ECC story
Elgin Community College started requiring students to meet with a financial adviser before taking out a student loan in 2011.
Since then, students’ default rate on those loans still has risen from 9.8 percent in 2011 to 13.1 percent in 2012, according to the college. “We’re going to need time” to see the effect of that program since default rates are calculated two or three years from the time students start to repay loans, according to Kim Wagner, managing director of student financial services.
But the community college also has seen a 72 percent decrease in the amount of tuition and fees that goes uncollected from students from 2006 to 2012, when it started its “cultural shift,” according to Amy Perrin, director of financial aid and scholarships. And it has disbursed an additional $9.4 million in Pell grants — $12.2 million last year — in that time, it said.
Last school year alone, the college’s financial aid and scholarships department served about 7,111 students. That’s about 70 percent of its students, compared to the 20 percent it served six years ago, Perrin said.
It distributed just over $22 million in aid, which includes loans, state and federal grants, work study and scholarships from both the Elgin Community College Foundation and its board of trustees. Of that, a total 1,695 students took out more than $5.5 million in federal loans through the community college last school year.
The community college’s financial counseling program requires students to meet with one of the school’s financial counselors before they can take out a federal loan.
They talk about what they plan to use that money for and set a monthly budget, the college has said. Counselors also can discuss with students how much they can expect to earn in their field of study, the college has said.
Recent Elgin Community College graduate Bryan Lantz of Elgin described the financial counseling he received when he enrolled in summer 2010: His counselor “broke everything down for me,” he said. He applied for the Trustees’ Scholarship. He applied for the foundation’s scholarship. Then she helped him fill out FAFSA (the Free Application for Federal Student Aid).
After that, Lantz, who hadn’t been sure how he would afford even community college, said, “They handed me the loan application, and I put it in the recycling bin. I didn’t need it.”
Know Before You Owe
Durbin, along with U.S. Sen. Tom Harkin, D-Iowa, introduced Know Before You Owe in March.
The act would require both public and private, for-profit colleges and universities to counsel students before they sign on to expensive, even unnecessary, private student loans, according to Durbin’s office. It also would require colleges to inform students if they are eligible for any federal loans they have not tapped, it said.
“Little did I know my idea was too late for Elgin Community College. You’re already doing it,” Durbin said.
In addition to those counseling requirements, private lenders also would have to get a certification from students’ schools before they could issue loans to those students, according to Know Before You Owe.
The senator called the community college “ahead of the curve” and praised the school for its focus on students. That’s something that “definitely” can work at a larger university, he said, “and it must.’
“I can go back to Washington and tell your story,” he said.