The University of North Carolina at Chapel Hill has long been recognized not only for the beauty of its Tobacco Road campus, but also as one of the most selective public universities in the United States. Ranked 5th nationally among public universities by US News, UNC admitted 25.7% of its 29,486 total applicants yet only 14% of those hailing from outside the state of North Carolina.
As the school’s associate provost and director of scholarships & student aid, Shirley Ort is the individual in charge of deciding which applicants – not only to UNC’s undergraduate program, but also to its graduate and professional schools – merit financial assistance for their pursuit of higher education. She administers a comprehensive program of over $350 million to more than 20,000 students in addition to advising campus officials on matters ranging from cost of tuition to national student aid issues.
Given her role at one of the country’s premier institutions of higher learning and her previous 18-year stint as deputy director for student financial aid with the Washington State Higher Education Coordinating Board, Ort is – simply put – someone that you listen to when it comes to the affordability of higher education. We recently caught up with her to discuss the $1 trillion student loan debt problem we have in this country as well as what we can do to promote better financial decision-making among young people:
Card Hub (CH): What do you make of the notion that student loans could be the next source of widespread financial distress?
Ort: Well, I certainly hope it’s not, and I hope that we’ve learned from our experience over the last four years or so in terms of things to watch and measures to take to protect borrowing and to protect responsible borrowing. But first of all, I guess what I think about it is I would hate public discourse to result in a lack of willingness on the part of Congress to continue to fund student loans because it’s really an important source for a lot of students and families to make sure that either they themselves or their son or daughter has a chance at getting an education because there’s just not enough grant money to go around. It’s fair as a means of helping individuals invest in themselves if they’ve not had the ability or the discipline – sometimes it’s a little bit of both – to save in the past. I know this was many years ago since I was in college, but I would certainly not have had access to higher education if I hadn’t borrowed. It was hugely important to me and I think, given the wage structure of a lot of our individuals and families, it’s equally important today that loans be available today to help educate the next generation and to help re-educate those that need to find a different niche in the workforce.
CH: As you mentioned, student loans have been integral to higher-education affordability for a long time; why are people having so much trouble paying them back these days.
Ort: Well, the economy – as we all know – is a much more difficult place to enter right now with the hope of job prospects than it was, for example, in the early ‘70s when I was entering the labor market. The whole world looked like it was my oyster then because there was just more promise and it was easier to find employment. The problems since 2008 [have] made it a lot harder for young people. I can’t cite the statistic, but I’ve heard it quoted by many that 53% of those students who have either graduated with a baccalaureate or an associate’s degree in the last few years are unemployed. If that’s anywhere close to accurate, that’s a great burden on young people who are carrying more debt than prior generations. You know, I just reflect on our experience here at Chapel Hill, and we are in a better position than are a lot of our peer institutions because we have more in endowments – not a huge amount, certainly not a huge amount compared to a lot of Ivey schools – but still we have a lot more in the way of private giving and endowments than do a lot of institutions. Even with that, as we look at where we are now and we project ahead, we can pretty much cover the cost of tuition increases because of the way we finance student aid in this state. But every time there is an increase in room and board, that translates pretty quickly into increased borrowing because we don’t have new and growing sources of grant or scholarship aid readily available to offset those increases. Our borrowing here is still favorable but it’s growing, and currently about 37% of our students are borrowing and the average cumulative indebtedness is a little over $17,000. Well, that’s a good statistic, but if you compare it to even two, three years ago, it was 32% borrowing and about $15,500 [average cumulative indebtedness]. So, we’re still in a favorable position here at Chapel Hill, but we’re very mindful as well when we look at the future. It’s very likely that more of the burden of paying for one’s higher education will fall to the student and the family, as there are fewer tax revenues to support students either through subsidizing instruction – you know, supporting the institutions, state institutions – or through providing direct sources of grants and scholarships to students. Sounds familiar, doesn’t it?
CH: What does your office do to ensure that student borrowers are aware of their options in terms of different ways to finance their education, pay back what they owe, etc.?
Ort: We do that which is required by all institutions – you know, the entrance interviews and the exit interviews – and those are done online. Then there is a lot of interest among professional programs like law or dentistry or medicine where they will often request some special assistance to help their students understand a responsible level of borrowing – borrowing only for what’s needed – and then repayment options. In this office, we don’t get into the counseling on repayment options; we don’t advise students on choose this or don’t choose that. But I do take some of my discretionary money and fund sessions that are taught through student affairs, including student loan management. When it’s appropriate – and that’s most likely when we’re dealing with a group of professional students – we would take a staff member who has expertise in that particular program – medicine, dentistry, or law – and have them join in the instruction when student affairs is doing one of these sessions. So, it’s a joint effort here. On our website, we also have a financial literacy curriculum that’s really comprehensive. It’s password-protected because we don’t have the copyright to it, but it’s available to any member of the UNC community who has an identification number. One of the things that I require of the student affairs staff in exchange for my financial contributions to the instruction is that they bring parts of that curriculum alive so that we get greater visibility for that resource for students. That has a section in it on repayment options as well.
CH: Is there anything that students are required to do as far as learning about personal finance is concerned?
Ort: No, there’s nothing required; [the aforementioned programs] are elective. The medical school does a little something extra because they target anybody who has cumulative debt of over $100,000, and then they schedule a personal interview with those folks. Maybe I shouldn’t say personal; I don’t know if it’s each one on one. I think it is, but I know they do really targeted efforts to make sure that they’re well aware of the impact of that level of debt, which I understand for medical school is pretty reasonable.
CH: What can we do to promote better student loan repayment habits?
Ort: There is a high correlation between defaults and completion. As a national agenda within higher ed., I think anything we can do to further a student’s completion of their certificate, their associate’s, or their baccalaureate, I think that will help bring the defaults down as well. But still, a lot hinges on how healthy the job market and the economy are.
CH: Do you feel there is a need to institute a mandatory financial literacy course, and could better personal finance education lead to smarter borrowing?
Ort: I think it could, at certain institutions. But I think that should be an institutional decision, and I think that decision about what’s required of students and the use of their time should be what’s rational given the borrowing and default problems at that institution. Here, our default [rate] is lower than 1%, so this is not something that we would see a need for. We can afford, I think, at this point in time to be service oriented and to reach out and try to make sure that we put opportunities in front of students who need them and are more likely to avail themselves of them. At other institutions, if you’re approaching a 20, 30, 40% default rate, it’s probably in your institution’s best interest to change some things that you’re doing to help borrowers make more informed decisions or help them understand their responsibilities in a way that could yield different results. I think it’s an institutional decision, and it’s not one that I foresee that we would require here. Chapel Hill is loath to imposing any kind of requirement like that on students. A lot of us would have liked to have implemented a required one-credit course on, you know, study skills and financial literacy and all for entering first-year students. That’s what Ohio State has done very successfully, but that’s in general disfavored here. The University typically does not want to be requiring one particular program or course of all students.
CH: What is the reasoning for that? Is it just an institutional policy?
Ort: It is, and I think it’s because there’s not consensus on for the need of it.