Complex Issues Affecting Student Pharmacist Debt

By Cain, Jeff; Campbell, Tom et al. | American Journal of Pharmaceutical Education, September 2014 | Go to article overview

Complex Issues Affecting Student Pharmacist Debt


Cain, Jeff, Campbell, Tom, Congdon, Heather Brennan, Hancock, Kim, Kaun, Megan, Lockman, Paul R., Evans, R. Lee, American Journal of Pharmaceutical Education


INTRODUCTION

The rising cost of higher education in the United States is a disturbing trend. Pharmacy school tuition and resulting student indebtedness have risen significantly over the last decade. (1) Initial assumptions typically suggest that the responsibility for increased student loan debt belongs to students. However, we assert that rising tuition and student debt is a multifaceted, complex issue that has origins within the academy, the accreditation process, federal and state governments, universities, and finally student and faculty culture. Reducing or even maintaining current cost levels for pharmacy education and concomitant student debt will not be straightforward, easy, or without controversy, but it is imperative that the academy confront the issues before they worsen. In this paper, we discuss some of the more notable influences on cost and student debt load and suggest potential actions that may allay the financial burdens.

REDUCED STATE SUPPORT OF HIGHER EDUCATION

Faced with financial pressures from the recent economic recession, state legislatures have significantly reduced higher education funding over the last several years. At first, most public institutions absorbed state funding reductions through spending cuts and efficiency measures. However, after those means were exhausted, the only major recourse to fund educational activity was through tuition increases, effectively shifting more of the costs to students. (2) In 2008, 31.6% of revenue used to cover public higher education operating expenses came from tuition, compared to 42.4% in 2012. (3) After inflation adjustments, annual tuition at 4-year public colleges has increased by $1,850, or 27%, since the 2007-08 school year. (2) Compounded over several semesters, the increased tuition adds substantially to the total cost of higher education for an individual and is a primary factor for increased student debt. (4)

GOVERNMENT ISSUES

Government regulation of loan eligibility, loan amounts, interest rates, repayment structures, loan deferment eligibility, and government loan forgiveness programs all impact the total cost of student loan debt. Student loan interest rates arguably have the single largest impact on student loan debt. On July 1, 2013, interest rates on certain types of loans doubled because Congress failed to prevent an expiration of subsidies. (5) The federal government, as opposed to the borrower, pays interest accrued on subsidized loans during periods of eligible deferment. This change to subsidized loans had the potential to nearly double the total payment amount of a loan. However, in August 2013, Congress passed a bipartisan deal to lower interest rates and tie them to market rates. Although this legislation has led to immediate relief for many borrowers, it will not protect future borrowers in a stronger economy when interest rates may rise to as much as 9.5% for graduate and professional students. (6)

Another factor affecting pharmacy graduates is recent change to federal regulations that no longer require lenders to place student loans into forbearance for a pharmacy residency or fellowship. The new regulation states that only medical and dental residencies qualify for mandatory loan forbearance. (7) While this has a smaller effect on student debt, it could cause some pharmacy students to opt out of postgraduate training because of inability to afford or unwillingness to make loan payments.

STUDENT PERSONAL FINANCE AWARENESS AND KNOWLEDGE

Students and their families must accept personal responsibility for aspects of their financial future. While factors pertaining to tuition, salaries, and job prospects are out of their control, students do make choices that affect their education-related debt. Some students engage in lifestyles that significantly exceed their income while in college, purchasing, for example, automobiles, clothing, and electronic devices, and even taking elaborate vacations. …

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