January 2012 newsletter
Who’s borrowing for college
Students use a variety of mechanisms to finance a four-year college education. Depending on eligibility, families pay for college using grants, work-study, family earned income, family savings and student loans. In recent years, state and federal grant aid has remained relatively flat while tuition continues to rise. With grant aid losing its purchasing power, families are using other sources to fill the gap. This has led to a rapid increase in borrowing and cumulative debt of graduates.
The most recent data shows that 71% of 2010 college graduates of four-year colleges in Minnesota graduated from school with federal and private loan debt, compared to 69% in 2001. For those who borrowed, the average debt was $28,755 — up from $15,311 for 2001 graduates. As shown in the table below, the average cumulative debt for 2010 graduates ranged by sector from $27,354 to $31,133.

According to finance experts at NorthStar Total Higher Education Loan Programs, a St. Paul-based nonprofit student loan organization, manageable payback of education loans should be 8% or less of gross monthly income. If a student graduates with the state's average of nearly $30,000 in cumulative debt and wants to repay the loan within 10 years, that student would have to earn $55,000 per year or more. Recent research suggests that the average earnings for recent bachelor's degree recipients are closer to $40,000 (Michigan State University's Collegiate Employment Research Institute report Recruiting Trends 2009-2010).
Who borrows and how
much?
Students who borrow to pay for school come from all income
levels. The most recent data available to analyze borrowing characteristics is
from the 2007-08 graduating class (see table below). While it might be counterintuitive, at each
debt level except the $10,000 to $19,000 range, the higher share of borrowers
are from middle- or high-income groups. For example, of those who graduated
with $20,000 to $29,000 in cumulative debt, 68.8% came from families earning
$50,000 to $99,999.

While the table above indicates higher proportions of students who borrow are from middle- or upper-income families, the table below shows that higher cumulative debt occurs in higher-income families.

Implications and
policy considerations
Minnesota's average cumulative debt for graduating seniors
ranks fourth compared to other states. However, it compares well nationally in the rate at which students default
on their student loans. The national default rate is 7% compared to Minnesota's
3.7%. For more information, see Federal
Financial Aid & Loan Default Rates.
While student borrowing is increasing, it does make higher education possible for many students. In so doing, this borrowing can be a good investment, one that provides a lifetime of economic gains. For example, students with bachelor's degrees earn on average 74% more than those who only earn a high school degree. And as current data suggest, Minnesota's high cumulative debt is not yet leading to increased default rates.
Yet increased borrowing by students has some troubling elements — especially when government grant aid has essentially remained stable or has decreased on a per-student basis (for more information, see the "Minnesota Educational Needs and Higher Education Finance Policy" research brief). Debt is most troubling when it discourages enrollment, prevents students from choosing the institution that would be the best fit for them, and makes it harder for students to complete their degrees. So with limited public resources, policy makers who are concerned about student debt should focus their attention on students with the greatest financial need and the impact of that debt on their futures.
Facts about student debt
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January term journeys
St. Catherine University physics department chair Terrence Flower has a big task to accomplish while teaching his current course: he has to convince 25 college students that the worlds of science and faith aren't necessarily contradictory. And he has one month to do it.
To accomplish this feat, Flower is accompanying his students on a trip to Switzerland and Italy, where they're visiting sites important to the fields of both theoretical physics and theology — disciplines concerned with answering questions about the origins of the universe and of matter. Through visits to the Vatican and two of the world's most famous laboratories, Flower and Phillippe Gagnon, a theology professor at the University of St. Thomas, hope that their course, "Quarks, Christians and the Cosmos in Italy," will help students get to know the universe better — and their place in it.
This is just one of many unique opportunities happening during January, when six Minnesota private college campuses hold January term (sometimes called "J-term") or interim, a monthlong opportunity to study abroad, complete an internship or concentrate on a single course on campus.
"The crossroad of science and theology is an intersection that can't be overlooked, because neither can fully explain the other," Flower said. "This is a neat time to go to this part of the world, because of the experiments related to matter that are going on there," he said. "It's exciting — these are some of the real frontiers of science."
The journey isn't a leisure trip, Flowers emphasizes, but a four-credit academic class. "This is a rigorous course," he said. "The fact is, the students are completing a full semester of work."
The common thread of all January term classes is their intensity, said Kathy Tuma, associate director of international and off-campus studies at St. Olaf College. "It's a more intense opportunity for faculty and students to learn about a topic in a condensed period of time. They can just focus on that one thing."
At St. Olaf, interim began in the late '60s Tuma said; many other institutions with a January term also began offering similar programs in the '60s and '70s. "It was immediately grasped as a time we could do off-campus programs, both internationally and in the U.S, as well as facilitate additional opportunities on campus."
January term fits in well with the mission of many of Minnesota private colleges, which emphasize innovative and interdisciplinary study, exposure to international perspectives and preparing students to lead and serve others.
And while campuses differ in their requirements, many students at St. Olaf choose to take interim, as St. Olaf calls it, all four years. This January, St. Olaf has 549 students studying off-campus for interim in 31 different programs. Interim is a popular part of the academic year, Tuma said, and shows no signs of being discontinued.
"Interim is a great opportunity for students," said Taylor Hannegan, a St. Olaf College senior and political science major. "You can study abroad for a month, get some valuable travel experience and cultural exposure, and then come back. A lot of students don't have time to do an entire semester abroad, or don't necessarily want to travel to a certain place for a whole semester."
Hannegan, who previously participated in a political science course held during interim that traveled to Slovenia, Italy, Croatia and Bosnia, is currently studying abroad again in Cuba.
St. Olaf students study "historical memory" in Cuba
Beginning with her first class in '97, St. Olaf College history professor Jeane Delaney has taken students to Cuba four times. When she learned that travel restrictions for student groups had again been lifted, she saw a great opportunity and began to plan her fifth trip, which she is currently on.
"It's an exciting time there," Delaney said when interviewed for this story before leaving for Cuba. Because of the changes that have occurred there since President Fidel Castro gave political power to his brother in 2011, Delaney said she has made changes in the way she'll teach her course, "Revolutionary Cuba." The course focuses on modern Cuban history, examining how residents recall past historical events, and incorporates lectures from historians and visits to museums and monuments dedicated to national history. She also wants students to get a sense of how people in Cuba live today by pairing them with families for part of their stay, she said.
"I want students to see the good, the bad and the ugly in Cuba," she said. "I want them to say, ‘this is a lot more complex than I thought it would be.'"
In order for her 21 students to be fully prepared for their program, she met each of them one-on-one and held three orientation sessions. The students were also required to read a book about Cuba and pay attention to the news there, she said. This particular tour of Cuba will also be interesting because one of the students going is Cuban-American, and this will be her first time visiting the country, Delaney said.
Delaney said that she believes interim is a valuable part of the academic schedule. "We couldn't get rid of interim without losing a lot of off-campus programs," she said. "Interim not only gets students off campus, it also keeps faculty internationalized."
She also said she enjoys teaching interim. "I like it because I know exactly what students' workload is and I get to see the same people every day, which makes it easier to build a group dynamic. It's a nice variation in schedule."
Don't call this South Africa tour a "trip"
For Ruth Lin, the conductor of the Gustavus Adolphus College symphony orchestra, taking nearly 60 student musicians to South Africa is a valuable educational experience — and one that shouldn't be confused with a vacation. "This is so much more than a trip," she said. "It's an international class."
Every four years at Gustavus, the symphony orchestra travels to an international location not only to perform, but to learn about the country they're visiting. Lin said she chose to go to South Africa because "I wanted to go to a place that I didn't think students would go on their own," she said. "This is a real opportunity to learn about and experience a culture."
Nearly every member of the symphony orchestra will be getting on a plane to Cape Town, South Africa on Jan. 21. They have concerts lined up there through Jan. 27, at a local school for the blind, an amphitheater and at the Cape Town International Music Festival. Then the group will travel to Johannesburg for two more concerts.
When they're not playing music, they will be traveling to some of the poorest parts of South Africa — the rural townships — to participate in service activities. All in all, they will be in South Africa for the last two weeks of interim.
The first few weeks of interim are being spent getting ready for the visit; students have a rigorous rehearsal schedule with Lin and are also taking a companion course that focuses on learning about the country and preparing for the service component of the trip.
Having students volunteer with local residents in need while in South Africa is important, Lin said. "We want the students to be going there not just to tour poverty, but to do some sort of cultural exchange, so they're not just tourists."
The undergraduates are excited about their upcoming journey, Lin said, as many haven't traveled abroad before; for others, this will be their first time on a plane. Above all, she hopes that the students play well and have a good musical experience, she said. "I hope the tour gives them a different perspective on their life, too, and puts their own problems in perspective. I want them to know that while no one is asking them to change the world, there are things we can all do to make a difference."
While this isn't her first time studying abroad during interim, Gustavus senior Meghan Peterson, who plays the violin in the symphony orchestra, said she's looking forward to traveling and performing just the same. "I know our tour will be a great opportunity to improve our skills as musicians while learning about a different culture," Peterson said. "This month is a good time for students to try new things — I think most students find that it's an eye-opening experience."
Short session expected
The Legislature will reconvene on Jan. 24 for what will likely be a much calmer session than Minnesotans have seen for several years. With the announcement in December that the state has a projected $867 million budget surplus, this is the first time since 2007 that the state's policymakers are not facing a budget deficit.
There are still some significant issues for the Legislature and governor to address. During even-numbered years, policymakers work toward approving a comprehensive bonding bill for the state's capital projects. Other driving forces this session will be proposals to stimulate job growth, the Vikings stadium debate, redistricting of the state's legislative boundaries and some additional constitutional amendment proposals.
Higher education issues
The House and Senate higher education committees will spend a significant portion of their time considering the bonding requests from the University of Minnesota and MnSCU systems. Bonding dollars are a significant source of resources for new construction and building upkeep on the public college and university campuses.
On the financing side, the public systems are adapting to the reduced budgets that were appropriated last session and the committees will likely hold hearings to learn about how the systems are responding. The Minnesota State Grant program is expected to be able to make full financial aid awards for the 2012-13 academic year, the first time in three years the program will be fully funded.
Since last session, there are three new faces in Minnesota's higher education leadership. This past summer, Eric Kahler took over as president at the University of Minnesota and Steven Rosenstone began his tenure as chancellor of Minnesota State Colleges and Universities (MnSCU). This fall Gov. Mark Dayton appointed Sen. Larry Pogemiller to head the Office of Higher Education. These three will likely spend considerable time before the higher ed committees as they identify their visions for their institutions and higher education in Minnesota.
Fact you can use
In 2010, 68% of Minnesotans aged 24 to 64 had some college or had earned a degree, compared to 65% in 2000. (Download a PDF of the chart).

Campus news
- Senior Police Officer Aaron Cawthorne, a 2007 graduate of Concordia University, St. Paul, was honored with the Medal of Valor for his role in the rescue of three young people from a burning SUV last summer. Cawthorne was one of six officers honored on Dec. 14, 2011, by the Des Moines, Iowa Police Department.
- Chandra Mehrotra, dean of special projects at The College of St. Scholastica, was honored by the Gerontological Society of America for mentoring minority researchers in the field of aging. He was also the subject of an extensive interview about distance learning in The Human Factor, a leading HR magazine of Asia.
- Augsburg College's Harry Boyte will serve as coordinator of the American Commonwealth Project, a nationwide initiative with the White House and U.S. Department of Education, to foster citizenship and citizen engagement. Learn more and join the effort.
- The 225,000-square-foot Anderson Student Center at the University of St. Thomas opened its doors on Jan. 17. Its completion caps a multi-building construction project resulting in part from a $60 million gift from Lee and Penny Anderson. The new facility features dining, retail, meeting and recreation spaces.
- The latest Macalester College video featuring President Brian Rosenberg playing the part of Scrooge has received coverage from the Star Tribune, MPR, The Chronicle of Higher Education, and The Washington Post. Also, Garrison Keillor is bringing his bookstore to Macalester. The student newspaper broke the story.
Briefs
- Lesley Lydell, a research and policy analyst with the Minnesota Office of Higher Education, is featured on the LearnmoreMN blog this month. Read her post, "Preparing for and entering postsecondary education" and consider joining the conversation by adding your comment. Dale Blyth from the University of Minnesota Center for Youth Development will be blogging in February.
- Nate Lassila, the Council's research vice president, had his article, "Effects of Tuition Price, Grant Aid, and Institutional Revenue on Low-Income Student Enrollment" published in the winter issue of the Journal of Student Financial Aid.
- Find it hard to keep up with higher education news? Here are a few recent articles worth reading:
- "What is College For? (Part 2)," New York Times, Jan. 11, 2012
- "What's on the state higher-ed chief's legislative radar?" Minnesota Public Radio, Jan. 10, 2012
- "Guest post: Eight thoughts on higher education in 2012," Washington Post, Dec. 23, 2011
- "The Value Gap," Chronicle of Higher Education, Jan. 11, 2012
- "Letter of the Day: College degrees," Minneapolis Star Tribune, Jan. 11, 2012

