WASHINGTON — The increasing burden of student debt on Catholics has turned into a major roadblock for young people trying to fulfill their vocations: whether it be for marriage, priesthood or religious life.
Cardinal Seán O’Malley of Boston raised the alarm in November about student debt, saying that "people are postponing marriage — are postponing a decision to go into the seminary or religious life — because they’re saddled under these tremendous debts which former generations didn’t have.
"If you have a $150,000 debt when you graduate law school, are you going to marry a girl who has a $130,000 debt and start off your marriage with over a quarter-million dollars’ debt?"
Just last year, Georgetown’s Center for Applied Research in the Apostolate (CARA) discovered that one out of three inquirers for religious life had an average student-debt load of $28,000. CARA’s 2012 study reports that many institutes had to turn away applicants, and "slightly under half" of applicants with student debt were accepted into candidacy or postulancy with a religious order.
American families’ student-debt burden totals more than one trillion dollars. The Wall Street Journal reported that the average student debt was $29,400, up 25% from four years ago, and that 10% of borrowers who started paying back their loans in 2011 had defaulted within two years. A survey by the Boston nonprofit American Student Assistance showed 29% of respondents reported putting off marriage as a result of their student loans, and 43% said that student debt factored in their decision to delay having children.
"It’s contributing to the destruction of a culture of marriage and the decline of the marital birth rate," said Allan Carlson, president of the Howard Center for Family, Religion and Society, who has researched extensively the challenges of student debt.
Carlson said healthy societies traditionally provided young people with start-up capital for marriage, such as dowries, wedding gifts of cash, land or property and help with housing, in order to encourage them to form families and have children.
"What we’re doing is burdening young people with vast amounts of debt, and the result is they’re delaying marriage, not getting married at all or having fewer children," he said.
Catholic Colleges Respond
Michael Galligan-Stierle, president of the Association of Catholic Colleges and Universities (ACCU), said Catholic institutions of higher learning are making strides to bend the cost curve down for their students.
"We are really looking to pass along value and affordability and transparency to our students and launch them in a good way," he said. "We really don’t want to hamper them, because having financial debt down the road has severe consequences for everybody."
Galligan-Stierle pointed out that almost half the students at Catholic universities and colleges graduate in four years: a higher rate than non-Catholic private counterparts, where 38% graduate in four years, and public universities, where 21% graduate in four years. Fewer years generally translate into less accumulated debt.
He added that Catholic colleges have stepped up to make college more affordable, as government financial-aid grants decline, with close to nine out of 10 students receiving institutional aid that averages $12,000 per year.
Some ACCU-affiliated colleges have opted to freeze tuition rates or increase them by less than the growth of inflation.
Galligan-Stierle said these combined efforts of the nation’s 200 Catholic colleges have "flatlined what it costs to go to Catholic colleges in the last five years."
Ohio Dominican University in Columbus, Ohio, is one of the Catholic universities cited by the ACCU as among the 20 member institutions that have increased student aid by 80% over the past five years to offset tuition increases.
"We put together pretty good packages for our students, and so as long as they remain in good academic standing with the university, they can continue to receive that aid," said Laura Meek, director of financial aid for Ohio Dominican.
Meek said Ohio Dominican focuses on pro-active financial counseling with students, both before and after they make the decision to spend four years at the university. Ohio Dominican students on average leave with approximately $25,000 in debt.
But their student default rate in 2011 was 5.1%, or 60 borrowers out of 1,200, in 2011, which is lower than the average default rate of 7% for Catholic institutions and the 14% national average default rate reported by ACCU data.
"It’s really important for schools to do as much proactive counseling as they can with students and families," she said.
"We’ve really tried to beef up our own efforts at orientation about financial literacy topics, so students can really be looking toward budgeting, managing credit and looking at borrowing by assessing needs versus wants."
The University of Notre Dame in South Bend, Ind., is one of 70 Catholic and non-Catholic institutions nationally that bases its student financial aid on "demonstrated need," according to Tom Bear, Notre Dame’s executive director for student financial strategy.
"We do a thorough assessment of what that need is," he said, "and then we meet 100% of that demonstrated need."
The university has an online tool that helps students and their families estimate their potential financial assistance, which Bear recommended should become standard for all universities.
Bear said the demonstrated need is met partly by self-help means, such as work-study programs and loans. He said the rest is met by Notre Dame’s generous "gift assistance," which makes up the rest of the cost and never has to be repaid.
As of the 2012-2013 school year, Notre Dame students graduate with an average $29,000 of debt ($21,000 being federal loans), according to Bear. This debt amounts to approximately 12% of the total cost of Notre Dame undergraduate tuition, but he said it should be seen in the context of a reasonable investment, like a car purchase.
"We manage that loan amount for students, so that, over the last several years, the amount of loans our students have has actually been going down," he said.
Ave Maria University in Naples, Fla., has opted to slash its tuition by 20% for 2014-2015 from $23,000 per year to just under $18,000. Jim Towey, president of Ave Maria, said the reduction was manageable because the university has kept a lean administration, has low maintenance costs (since the buildings are all new) and donors will provide $8 million in scholarships next year.
Towey said the average debt for an Ave Maria graduate is under $20,000. The new tuition reduction starting in 2014-2015 may help reduce that cost even further.
"Part of our mission is to keep quality Catholic education within reach of as many families as possible," he said. "Many of our families are home-school families or very large families. These families don’t have a lot of money to begin with."
Reducing the Burden
Carlson of the Howard Center said two systemic reforms need to occur to reverse the damage being done to young graduates: First, reform bankruptcy law to allow people to discharge student loans that they are unable to repay; and, second, remove the federal government from the business of providing student loans, which would disincentivize universities to look at the federal government as a guaranteed credit card and force them to exercise rigorous financial discipline.
He added, "My modest proposal is relieve the debt for couples responsibly giving birth to children."
Carlson has proposed that the federal government forgive at least $5,000 of the principal of student debt for each child raised by debt holders. For a married mother and father with a family of four, this would reduce their principal debt by $40,000. He also suggests that the same incentive be applied to married couples who adopt.
"I see it as a way for compensating the damage that’s been done by the program," he said. "The government has created this monstrosity. One way to deal with it is to reverse the incentives from negative to somewhat positive for children and marriage. That’s what I would do."