POINT LOOKOUT, Mo. (AP) - Tara McCloskey, the sixth-born child in her family of 10, grew up wanting to go to college but wondering how it would ever be affordable.
She had watched two of her older sisters leave higher education because the cost was too high. Two other sisters had graduated, but they were still paying back their student loans six to 10 years later.
“The idea of graduating debt-free was huge to me,” she said. “I want to be free while I’m young to do different things and not have to worry about paying off my education.”
Student loans have indeed become worrisome to millions of students and graduates who are saddled with an increasing amount of debt. There are more than 44 million borrowers with approximately $1.4 trillion in student loan debt in the U.S. alone, according to the latest statistics from Make Lemonade, an online personal finance company. The average student in the class of 2016 has $37,172 in student loan debt, the group said.
But McCloskey will be one of the lucky ones. She is enrolled at College of the Ozarks, which has developed its own unique solution to the debt crisis by not participating in any federal or state loan programs and by not honoring private bank loans for students, The Joplin Globe reported.
That move essentially means that students who graduate from the private, four-year school near Branson will do so without owing anything for their education. They pay for their tuition and room/board costs by working at one of about 130 stations around the campus - in the six greenhouses, at the campus restaurant, in the kitchen that produces the college’s famous fruitcakes - throughout the year.
“Student debt is an increasingly serious problem in education,” President Jerry C. Davis said in an interview with the Globe. “This is a work college, not a loan agency.”
It has been about four years since the college - nicknamed “Hard Work U” - rejected student loans, and officials and students there couldn’t be happier about how the model works. Davis noted that the Work Colleges Consortium, of which he is the chairman, added a handful of new institutions to its group this year, and he has fielded phone calls from other small colleges that want to know how College of the Ozarks maintains its debt-free philosophy.
Davis, who has been at the helm of the college for decades, is adamant about continuing that philosophy into the future.
“I know (student loan debt) is an unnecessary burden,” he said. “I am not going to preside over some kind of debt machine.”
Rachel Hajek, a sophomore from Steelville, had grown up hearing about College of the Ozarks from her grandfather. He’s alumnus whose family couldn’t afford to send him to public school on the school bus. So when Hajek herself was looking at higher education options, the college stood out first in her mind because of its debt-free appeal.
“I didn’t want my mom to take on the burden of my education,” she said.
Hajek worked 40-hour weeks over the summer to cover her room and board costs, and she currently works 15 hours per week in the fruitcake/jelly kitchen to cover part of her tuition costs.
She likes the work, but she likes even more the promise of graduating without student loans to repay. She has dreams of traveling, working overseas, buying a new car or house and perhaps opening her own business - all endeavors that she expects to be easier to accomplish without debt.
“Once I graduate from here, I won’t have that enormous debt over my head weighing me down,” she said. “I do not want that burden, and I won’t have it.”
Hannah Deal, a junior from Claremore, Oklahoma, attended one year at a public university in her home state before she started to “feel the burden” of the price of her education hanging over her. She soon transferred to College of the Ozarks, where she works in the weaving station making placemats and other home decor on one of the college’s dozen looms.
The total cost she now expects to pay for her school year: a health/technology fee to the tune of about $250, plus books for her classes.
“It has definitely given me an extra boost in the world,” she said.
That’s the whole point of the debt-free philosophy, said Sue Head, vice president for cultural affairs and dean of character education. So many College of the Ozarks graduates want to enter lower-paying fields such as ministry or education or enroll in graduate school, and those options frequently aren’t viable if someone owes thousands in student loans, she said.
She points to a recent College of the Ozarks graduate who left the school without any debt. He bought and refurbished an old church in the Kansas City area and now operates a successful custom furniture store out of it, she said.
“If they were saddled with a lot of debt, I don’t think they would have taken that risk,” she said. “I think (going debt-free) has been a win for everybody.”
The College of the Ozarks has found a way to avoid sending its graduates into the workforce with student loan debt, but a majority of students who leave other higher education institutions aren’t so lucky - and the numbers are rising.
Only 20 percent of all student loan borrowers had more than $20,000 in debt upon graduation 15 years ago, but that number has now jumped to more than 40 percent, according to a report out earlier this month from the Consumer Financial Protection Bureau.
As borrowers increasingly wait until they’re older when they begin to repay their loans, or as parents or grandparents take out loans on behalf of their students, the number of consumers with a credit record who have an outstanding student loan debt is pushed to 20 percent, the bureau report said. That’s particularly troublesome because up to 30 percent of older borrowers don’t pay off their loans in the standard 10-year repayment period, according to the report.
“How quickly and how successfully borrowers manage to repay student loans has important implications not only for borrowers and holders of student debt - largely the federal government - but for other credit markets as well,” the authors of the report said.
Recognizing the problem, colleges and universities have ramped up efforts to help their students better understand their debt. As a result, Missouri’s student loan default rate has declined from 13.1 percent in 2014 to 11.5 percent currently, according to the state Department of Higher Education.
Missouri Southern State University in Joplin recently received a $25,000 one-year grant that will go toward programming to help students avoid defaulting on their loans. This marks at least the seventh or eighth consecutive year that MSSU has received such a grant, said Becca Diskin, director of financial aid.
The grant helps with the cost of software that allows the university to track and reach out to MSSU graduates who have student loan debt, Diskin said. That way, financial aid counselors can work with students to help them get on a loan repayment plan or consolidate their loans to avoid defaulting, she said.
Funds also will be used for counselors to work with sophomores and juniors who take out student loans. The counselors will try to help students understand their repayment options and how to avoid borrowing too much, Diskin said.
About half of Missouri Southern graduates leave the university with at least some debt. The average debt load for those students is around $19,000, Diskin said.
“I think what we’re doing does help,” she said. “It’s just a very long-term-results situation. You’re not going to see the effects of what you’re doing right now until later.”
Cottey College in Nevada received a similar grant this year to target students who need more information about loans or who are at risk of defaulting. The grant will help fund two new student worker positions, printed mailers for graduates, two tablet computers for data collection purposes and in-person exit counseling sessions.
“We’re hoping that our annual default rate will decrease as we increase communication about financial literacy and default prevention,” said Sherry Pennington, director of financial aid, in an interview with the Globe in July.
At Pittsburg (Kansas) State University, officials have taken an increasingly proactive role in recent years in reaching out to students who have left the university to educate them on their loan repayment options, said Tammy Higgins, director of student financial assistance.
The university works as an “active liaison” between students and the U.S. Department of Education, the entity to whom they’re most often repaying their loans, she said.
“We nationwide realize that loan debt has increased, and we want to be able to assist the student,” she said.
Graduates of PSU leave the university with an average of less than $25,000 in student loan debt, Higgins said.
College of the Ozarks charges no tuition. Instead, the institution provides the opportunity for each full-time student to work at one of more than 100 campus work stations to pay in part for his or her cost of education. Student jobs range from working in the fruitcake and jelly kitchen to milking cows at the campus dairy to serving meals in the college’s public restaurant.
The remaining portion of each student’s expenses is covered through scholarships provided by gifts and contributions from donors. Debt is openly discouraged and no federal, state or private loans are made.
Information from: The Joplin (Mo.) Globe, https://www.joplinglobe.com
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