A mountain of debt, How Montana’s students and alumni work to escape significant levels of student debt.
College graduates throughout Montana are struggling to balance their student debt with the reality of lower wages than they expected,1 making it much more difficult to prepare for the future. Montana’s graduating class of 2012 had an average debt loan value of $27,475, with 64 percent of graduates finishing school with debt.2 With a median household income of $45,088,3 though, Montana has the sixth highest student debt to median income ratio in the country.4 And, with only half of the job openings in the state paying a living wage for a single adult,5 the debt burden faced by college graduates in Montana will be a significant part of their monthly budget for years to come.
Since the peak of the financial crisis in 2008, states across the country have decreased funding for higher education. Between 2008 and 2014, Montana cut per student funding for higher education by 6.8 percent.6 Cuts like these have led institutions across the country to respond by increasing their tuition by an average of 27 percent since the 2007-2008 school year, 7 far outpacing inflation.
While tuition in Montana has increased less compared to other parts of the country, students are still feeling the squeeze — especially given the state’s meager funding for need-based financial aid. Though federal funding for higher education has increased over the same period, it has fallen short of fully negating the effects of increased tuition and lack of need-based aid,8 leaving many students in Montana with little option but to take out loans to finance their education and other living expenses. Because student loans cannot be restructured nor discharged through bankruptcy, many graduates find themselves restricted in their career choices and in their spending ability in order to pay off their loans. Workers with other forms of debt, including mortgages and credit cards, can restructure their loans or discharge them through bankruptcy.
However, 2005 federal legislation ensured that “no student loans — federal or private — could be discharged in bankruptcy unless the borrower can prove repaying the loan would cause ‘undue hardship.’”9 Graduates and their families, then, are left burdened by debt even as they struggle with low incomes and lack of economic stability.
“A Mountain of Debt” reveals the challenges students and their families in Montana face in grappling with rising costs of college, and the efforts made to escape significant levels of student debt. Through our survey on the effects of student debt on graduates’ futures, 113 former students, graduates, and parents shared their perspectives. In addition, four stories were collected from Montanans struggling with their student debt. Together, they illustrate common themes both of hope for following their passion and fear of becoming stuck in the low-wage economy. Their voices lift up the need for state policymakers to find innovative funding solutions to reinvest in higher education, meeting the needs of college institutions as well.