Laura Reuter, a Buena Vista University sophomore from Le Mars, is the first sibling in her family to get a college education. Laura and her mother, Lisa, a divorced parent with two daughters and living on a fairly limited income, devote a lot of their attention to the cost of college. “I pretty much pay for college on my own, with some help from my mom,” says Laura. “I can’t just go spend money for anything. I pay for tuition, room and board, and books, and when I go home my mom buys my car insurance, snack food, and other necessities. I have to watch my money pretty closely.”
      By the end of the 2003-04 academic year, Laura, who is majoring in physical education with a minor in math education, had taken out $6,500 in student loans, and she expects to have at least $16,000 in loan debt by the time she graduates. That could grow to nearly $20,000 if she has to go an extra semester, because she switched her major from elementary education. Laura also receives an Iowa Tuition Grant, some scholarships, and institutional gift aid from BVU.

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     BVU President Fred Moore says the affordability of higher education has received greater emphasis in recent years for a couple of reasons. “First, as states have experienced financial duress, one of the areas where they have rolled back support is higher education, and this has affected all levels of education,” says Moore. “State universities and community colleges have been forced to approve double-digit tuition increases. At private schools, state funding does not represent as big a source of the budget as it does for the public schools, but it has had an impact, especially in Iowa where the state-funded Iowa Tuition Grant (ITG) program is so important.”
     “Additionally, as the nation’s financial markets have been affected by the economy, institutions that rely on investment income to fund their programs have had fewer resources to make ends meet, which puts additional pressure on pricing,” says Moore. “Also, in the Congressional reauthorization of the Higher Education Act, the issue of affordability has drawn much more interest this year, including discussion of caps on tuition increases.”
     Like most other organizations, unrelenting economic forces also putting more pressure on the university’s costs, says Randy Fehr, vice president for business services.
     BVU has taken measures to contain some key costs, says Fehr. This year, for the first time, employees have been asked to pay part of their single-coverage health insurance costs, and the deductible limit has been increased. The university is also looking at additional ways to control rising utility costs.
      However, because many of the costs — such as technology, faculty/staff salaries and benefits, and student housing — have a direct impact on the quality of the academic and co-curricular programs and the quality of life on campus, institutions have to take great care in examining cost control initiatives, President Moore emphasizes.

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     Moore has been a strong advocate of financial assistance programs that provide students with opportunities for greater access to higher education.
     This year, he chairs the Tax Policy Committee of the National Association of Independent Colleges and Universities (NAICU). In this role, Moore is responsible for leading the association’s board of directors in setting policy agenda in the tax arena to help families save and pay for college. NAICU represents nearly 1,000 private nonprofit colleges and universities on policy issues with the federal government.
     He also served on the board, and is a past chair, of the Iowa Association of Independent Colleges and Universities (IAICU), and is a past member of the board of the Council of Independent Colleges. He recently became a member of the Board of Trustees for the Council for Adult and Experiential Learning (CAEL) and also serves on the Iowa Learns Council.
     Moore notes that a fact of life for colleges is the increasing competition for donor gifts, which fund scholarships and other programs that benefit students.
     “It used to be that in comparison to other charities, higher education had the most highly-developed fund raising organizations,” explains Moore. “That is no longer the case. Public institutions and other charities have become more aggressive and sophisticated about fundraising. So our work to develop gifts as a resource to defer costs is more competitive.”
     BVU also faces increasing competition in recruiting new students. With a declining number of high school graduates in the region historically served by BVU, the university has expanded its recruiting efforts into major metropolitan areas in the upper Midwest.
     Cost is an important factor in getting a student to look at a college in the first place, and if the final decision comes down to a close call between colleges, the choice often comes down to cost, says Moore.

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     For the 2003-04 academic year, BVU’s tuition rate was $19,862, which placed it in the top tier of the schools in the Iowa Intercollegiate Athletic Conference (IIAC), according to statistics from the Integrated Postsecondary Education Data System (IPEDS).
     Buena Vista University’s 2003-04 tuition was a 6 percent increase over the previous year, which compares to a 6 percent national average for private colleges as reported by The College Board, a national nonprofit organization that provides major programs and services in college admissions, guidance, assessment, financial aid, enrollment, and teaching and learning.

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     With the average family income of BVU students who qualify for assistance running just over $60,000, how does BVU show students and their parents the value they receive for their investment?
     “While nothing I say should be construed to denigrate the state institutions, I think our size gives us an inherent advantage that is very difficult for large schools to replicate,” says President Moore. “We have small classes, faculty who are rewarded primarily on their competence as teachers, and it is easier for students to become involved in the co-curricular life of the institution.”
   “While small size gives you an advantage, you have to have a faculty and staff, as we do at BVU, who are passionate about their work and want to create an energized and dynamic educational environment,” he adds.
     Keehner notes that some of the key elements of added value at BVU that appeal to prospective students and their parents are: the wireless laptop technology that is now a seamless part of the teaching and learning process; the ability for students to graduate in four years; and an “employment/ graduate school acceptance” rate that exceeds 90 percent.
     Not too surprisingly, the appearance of a well maintained and modern campus also resonates well with parents, says Keehner. “As a parent, when I see that an institution pays attention to the smaller details, I am confident that it will pay attention to the quality of the faculty and academic program.”
      To put the value of a college education in a financial perspective, The College Board estimates that college graduates can expect to earn $1 million more in lifetime income than if they not had gone beyond a high school education.
     However, college graduates get more out of their education than a passport to a good career. They also get a greater understanding of, and appreciation for, the historical, cultural, economic, and political forces that influence the world.

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     BVU students graduating in May 2003 had an average debt load, including alternative (non-federal) borrowing, of $20,102, according to Leanne Valentine, director of financial assistance at BVU. (Students who borrowed zero are included in the average. Loans that transfer students may have taken at another institution are not included.)
     Keehner says that over the past four years, this is about $2,000 increase in average debt for graduating seniors. “We have kept debt at a pretty reasonable amount, and this year the percentage of students who borrowed at all went down a couple of percentage points,” she notes.
     “We have continued to invest additional institutional dollars in our students, because a fundamental part of our heritage is to make college affordable and provide access,” says Keehner. “Today, we have more students whose parents are experiencing financial stress.”
     “I think we do a good job of trying to help students keep their debt down, but I worry when students leave with $20,000 in debt and what that means with the current state of the economy,” says Keehner. “Five years ago, I was fairly confident they would get a good, stable job. Today, that may take a little longer.”
     Keehner notes that just over 93 percent of the Class of 2003 graduates responding to a survey reported they were employed or in graduate school within six months of graduation. This is down from 99 percent the previous year. “This indicates to me it is taking them a little longer to find a job they want. I think in many ways we are teaching our students to be more particular in selecting a job, and the need to stay with it once they get it. Thus many are working in hourly jobs until they find what they are looking for.”
     Most students, especially by the time they are juniors, are very aware of the student loan debt they have accumulated and how they will pay if off.
     Buena Vista University graduates have maintained a good repayment history. The default rate for BVU graduates was 2.8 percent for 2001, the latest year for which the data was available, which is below the national average of 3.5 percent for private schools, says Valentine. This is down from 3.2 percent in 2000, and 3.3 percent the year before that.
     “I attribute this to the level of responsibility of our students,” says Keehner. “They are pretty pragmatic. My guess is that student loans are one of the first things they pay off.”
     “Our Office of Financial Assistance does a good job of preparing students to deal with this debt responsibly,” says Keehner. “They talk about the default rate, and their obligation to help ensure that future BVU students can continue to get student loans.”
     “If a school has a default rate higher than a predetermined threshold, it can be subject to some sanctions,” says Valentine. “We explain to students that if they are in default they can face adverse credit when trying to get credit cards, home loans, or car loans, as well as losing subsequent income tax refunds.”

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One of the most important financial assistance programs for Iowa resident students at BVU is the Iowa Tuition Grant (ITG). This program has provided grants to eligible resident students attending Iowa private colleges since it was enacted by the state legislature in the late-1960s. Currently, the maximum grant is $3,600.
     “If you look at the history of the ITG, it was supposed to level the playing field for needy students in being able to choose between going to a state school or a private institution,” says President Moore. “But it has not kept pace with that. As a percentage of a student’s total educational cost, the purchasing power of the ITG has gone down.”
     Recent figures from the IAICU show that the maximum tuition grant covers around 21 percent of tuition and fees for eligible students, compared to nearly 48 percent in 1974-75. What if there were no ITG?
     “At BVU, the ITG is about $4 million of our budget, so there would be serious implications for us,” says Moore. “But most importantly, think what impact that would have on our students.” At the Storm Lake campus, 719 students — or approximately 67 percent of the Iowa resident students — received the ITG this year. In addition, close to 900 students at BVU’s satellite Centers receive the ITG.
     Statistics compiled by the IAICU show that only 5 percent of the state’s higher education budget goes to private schools, yet they account for 47 percent of the baccalaureate degrees in Iowa, and of that a large percentage of the graduates are ITG recipients.
     For fiscal year 2005, Gov. Tom Vilsack has approved a $1.9 million increase in state funding of the ITG.

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Other Financing Options

     Private colleges across the nation are looking at new ways to be more affordable.
     For example, BVU is among more than 200 private institutions to join in a pre-paid tuition plan, called the Independent 529 Plan. This program offers prospective students’ parents, grandparents, and others the opportunity to purchase a percentage of future tuition at the participating colleges. The program is maintained by the Tuition Plan Consortium and managed by TIAA-CREF.
     Basically, under this plan parents lock in tuition rates that are in effect now by purchasing a tuition certificate. The certificates are redeemed at participating colleges when the student is ready to attend college. Earnings grow tax-deferred and are free of federal income tax when used for undergraduate tuition and fees. Some schools have also implemented tuition rollbacks or freezes, with varying degrees of success. “Most of the institutions that have tried tuition rollbacks have not been successful. It’s not that simple to just lower your prices,” explains Moore. “Students don’t qualify for uniform amounts of federal aid. The federal programs and our institutional programs key off need, and each student’s needs are different. So it’s not a one-size-fits all situation in financial aid.”

A Positive Outlook

     Will a private college education continue to be financially attainable for all students in the future? “By my nature, I am an optimist,” says President Moore. “We do everything we can to remove cost as a barrier to attending Buena Vista University, and I am confident that we’ll remain very successful in doing so in the future.” “However, I do have some concerns,” continues Moore. “As the federal budget and most state budgets have become tighter, I worry about the resources available from those entities for students. I think we must continue to advocate aggressively with decision-makers on those budgets to make sure we fund student assistance programs.” “I also worry about the tradeoffs that institutions have to make today, and, as we go forward, how they are going to be able to strike the appropriate balance between investments to make sure quality is there, and that students have access. I don’t think this will get any easier to do. In fact, it will become harder,” says Moore. “Education is critically important to the vitality of our nation — intellectually, culturally and economically,” he concludes. “These are investments that we must make as a state and as a nation.”

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     Buena Vista University President Fred Moore recalls that he was fortunate in incurring little debt in his own undergraduate education 30 years ago at the University of North Carolina, but it was a different story when he attended law school.
     “When I was a small child, our family was working poor, or lower middle class,” he says. “By the time I got ready to go to college my father had switched careers and had become very successful. I went to a state institution and the cost was very little. I think my semester tuition was something like $250, with room and board costs on top of that. I was also a resident advisor, which also helped defer some of that cost.”
      When he went to graduate school to earn his MBA, the Moores lived in married student housing. “Susan had finished her undergraduate education and was working in the human resources department at a bank, so we did not have to borrow money. She was paying for my graduate education.”
     When Moore went to law school, Susan was in the seminary at the same time, “so we borrowed heavily for that. I did get a small scholarship and Susan got some scholarships and financial aid to Duke Divinity School. We were also resident managers of an apartment complex, so were able to live there on a reduced-cost basis,” he recalls. “Even so, by the time we finished school, we had rolled up around $40,000 in debt. That probably took us 10 years to pay off.”
     “Because I was fortunate in the economic circumstances I faced in going to college, I feel even more strongly about the issue as far as the conditions that most of our students confront today,” he adds. “I did not really understand the value of a small private college until I worked at one.”

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  Student Senate President Led Push for Iowa Tuition Grant Funding

     As a BVU Trustee Scholar, Dave Laudner, a member of the Class of 2004, feels fortunate that he was able to graduate from Buena Vista University this spring without any student loan debt.
     However, Dave, a native of Rockwell, Iowa, is very concerned about the rising cost of college and the cloud that has hovered over the Iowa Tuition Grant program (ITG), which is a critical part of the total financial package available to BVU students who are Iowa residents.
     As president of the Student Senate for the past two years, he worked for continued parity in state legislative funding of the ITG program. In the spring 2003 semester, the senate hosted a “summit” meeting of around 40 student leaders from private colleges and universities in Iowa, with a focus on the ITG. The meeting was prompted by the state legislature’s $400 per student cut in the ITG announced in the fall of 2002. “John Hartung, executive director of the Iowa Association of Independent College and Universities, talked about the history of the grant and why it is necessary,” says Dave.
     As a result of the meeting, students from the 10 colleges organized a postcard campaign to state legislators. Around 200 handwritten postcards were sent by BVU students, in addition to letters on BVU stationery from student senators. “We kept the letters positive, and thanked the legislators for their support of college students,” says Dave.
     Dave thinks the students got their message across: “It’s not too often that legislators get that many letters from the 18-24 age voting bloc.”
     Dave, who has been on the Student Senate since he was a freshman, also played football for three years and is a member of the Pre-law Club and The College Young Republicans.
     While Dave left BVU with a double major in political science and economics and a clean financial slate, the road ahead will be more financially challenging. He will be enrolling in law school at Drake University or Creighton University this fall and anticipates incurring at least $30,000 in student loan debt by the time he graduates.
     His sister, Sarah, a BVU freshman who is looking at a career in elementary education, is not quite as fortunate in financing the cost of her undergraduate education. Though she is the recipient of scholarships, including the Z.Z. White scholarship, the ITG, and work-study, she anticipates she will have more than $20,000 in student loan debt when she graduates.
     In addition to their BVU scholarships, both Dave and Sarah are among the graduates of the Rockwell school district who have received a hometown scholarship that was funded by a local benefactor. Each academically eligible graduate receives a $1,000 grant his or her first year in school. The grant is renewable, with succeeding amounts depending on the total number of applicants.
     Both Dave and Sarah have also received assistance from their parents. Their father, Rick, is part owner of a grocery store in Rockwell and their mother, Audrey, is a secretary at Prairie Ridge, an addiction treatment center in Mason City.
     Dave says students generally have come to accept the fact that they will have a student loan debt when they graduate. “Almost every student here is getting financial aid, but most will probably average $15,000 to $20,000 in debt by the time they graduate,” he comments. “There are professors here who tell us that they are even still paying off their student loans.”

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  Mathisen Family Has a Big Commitment to College Education

     Todd Mathisen is confident that his son, Tom, who will be a senior at Buena Vista University this fall, can handle his student loan debt.
     “Anytime you carry a $20,000 debt, it’s a little concerning, but it’s not anything Tom can’t handle,” says Todd, who farms near Cylinder, Iowa, and owns a livestock trucking business. Tom’s mother, Jana, is the business office manager at Prairie States, a livestock management company in Emmetsburg.
     Tom, a double major in finance and accounting, says scholarships pay for about half of his college costs, with student loans funding another 25 percent, and the balance coming from work-study, money he earns during the summer and assistance from his parents.
     Tom says his student loan debt is “something you may not think about when you are a junior in college, but it’s always in the back of your mind. I don’t anticipate it will be an excessive burden for me when I graduate. I am pretty confident it will work out.” Tom has an internship this summer with Ernst and Young, which he expects will bolster his resume and possibly lead to a job offer when he graduates next May and pursues career plans to become a CPA.
     Financing college educations is a big commitment for the Mathisen family. The Mathisens have two other sons, Brent, who graduated from Iowa State University in 2003 and is now an internal auditor at Wells Fargo in Des Moines, and Jordan, who will enter the ninth grade this fall. “When Brent graduated from ISU, he had as much student loan debt as Tom will have at Buena Vista University,” says Todd. “BVU’s grant program really stepped up with Tom’s high GPA and helped with tuition.”
     “I have told our sons that the only way they could join our farming operation is to get their four-year degree first,” says Todd. “Then, if they didn’t like what they were doing for a living, they could come back to the farm.”
     “Just applying yourself in college is so important,” says Todd. “In addition to your education in the classroom, you’ll learn to act respectably and responsibly; you’ll be prepared to get a good job and become a worthwhile member of society. This is an extremely important part of getting a college education.”
     In addition to his studies, which have earned him a place on the Dean’s List every semester, Tom worked this past year as an academic assistant in the School of Business, played football, and was a member of the Business Club.

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  Tom Stewart Can’t Put a Price Tag on the Skills He’s Learning

     Tom Stewart, who will be a junior this fall, is one student who looks at the big picture in the value of a college education.
     A double major in political science and theater from Williamsburg, Iowa, Tom estimates he will have around $17,500 in student loan debt when he graduates. In addition to student loans, his college costs are financed from scholarships, BVU institutional gift aid, an Iowa Tuition Grant, work-study income, and assistance from his parents.
     “There is a huge emphasis on education in my family,” says Tom, who has two older brothers who have graduated from college. His father is a Presbyterian minister and his mother is a high school teacher.
     For Tom, there is no question about the value of a college education: “The skills I have been able to develop at Buena Vista University have been things you cannot put a price tag on; they are the things that are invaluable in the marketplace. College makes you better-rounded, so that you can handle the stresses of the economy or the job market.”
     “From my own experience, getting a higher education is far less about being able to get a job so much as it is equipping you with personal skills, knowledge, drive, ability, and insight,” says Tom, who plans to eventually go on to law school or graduate study in international relations. “These skills prepare you to do things for yourself, find a good job, and think creatively.”
     With his heavy involvement in campus activities, Tom gets to see different sides of the college affordability issue. He served his second year on the Student Senate and is involved in College Democrats, choir, theater, Students from Diverse Populations, and the Student MOVE executive board, which coordinates community service projects.
     “The scary part about increases in college tuition and expenses, and the debt students are incurring, is that we are seeing employment trends where graduates are having a harder time getting jobs with good health insurance benefits,” he says. “This can be an enormous expense, especially when you are paying back student loans. Health insurance takes a good chunk out of an entry-level salary.”
     Tom also has some concerns about state funding of the Iowa Tuition Grant program.
     “This is a wonderful program that is incredibly effective,” he says. “Iowa students who go to private colleges in the state are more likely to graduate in four years than those attending public institutions, and they are more likely to stay in Iowa after graduation, which is a big political issue now.”
     “This program also has a big impact on BVU because we have the highest percentage of students of any Iowa private college who are tuition grant recipients,” he adds.
     “However, I have concerns that our state does not value higher education as much as in the past,” says Tom. “In the middle of the 2002-03 academic year, we found out that we would receive $400 less per student. That placed a fairly immediate impact on a lot of students and their families, including me, and is something we may have to face in the future.”
     “The affordability of higher education in Iowa is in a critical position when it comes to the importance of retaining our college graduates in the state,” says Tom.

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  Abby McCorkel Gets an Inside Look at Financial Aid

     Abby McCorkel, a senior from Stuart, Iowa, who will graduate in August with a major in athletic training, has a special perspective on financing a college education because she has worked in the Office of Financial Assistance as the student loan default coordinator.
     “I helped make up a brochure telling the options for those who were in default on their loans,” she says. “I also called and talked to them about it and have been successful in quite a few cases.” Abby also has been involved in planning on-campus presentations on student loans, as well as a financial management series for students that started in February.
     Abby spent her freshman year at the University of Northern Iowa and transferred to BVU in the fall of 2001. “My net cost was actually less at BVU because I received more scholarship money here,” she notes. Abby was on campus for a year the same time as sister, Melissa, a May 2002 graduate.
     Abby is paying for her BVU education with help from her mother, student loans, scholarships, the Iowa Tuition Grant, and work-study and other jobs. “I expect to have around $21,000 in student loan debt, including a partnership loan with my mother, when I graduate.”
     She has found it has made a difference sticking to a budget. She makes a point of paying off any credit card balance each month, buys her books on the Internet, and drives a 1995 Beretta with 150,000 miles on it. “It’s the same car Melissa had in college, and we both shared it while she was here,” says Abby.
     She plans to attend graduate school this fall to major in biomechanics or exercise physiology and eventually get her doctorate with an eye toward teaching or working as a curriculum director for an athletic training program.
     “I want to get a graduate assistantship and start paying on my loans, so I can pay them off in less than 10 years,” she comments.
     On campus, Abby was on the track and field team, is a member of the BVU Athletic Training Society, the Science Club, and Student Ambassadors, and also was in Esprit de Corps. She was on the Dean’s List most of her academic career. She has also been involved in a tutoring program and was a teaching assistant in exercise science.

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  Jaclyn Hugg’s Financial Investment Includes $16,000 in Loans

     Jaclyn Hugg, who is double majoring in Spanish and leadership communication, estimates that she will accumulate close to $16,000 in student loan debt.
     In addition to the student loans, she is paying for her education through scholarships, work-study, personal savings, and assistance from a grandfather, who set up education funds for his five grandchildren, of whom Jaclyn is the oldest.
     “Like most students, I’ve had to be a lot more careful with my spending,” she notes. “I no longer spend money like I did in high school on clothing, electronics, etc. My books cost a pretty good chunk of money twice a year, so it takes me a while to save up even that much.”
     Jaclyn, a native of Marion, Iowa, who spent the spring semester studying in Spain and will be a senior this fall, is still weighing her post graduation options and how she will pay back her student loans. “I may go on to grad school. But if I decide to jump right into the workforce, I would like to find some way that my employer would help pay for my student loans or for graduate school.” She says she would eventually like to specialize in public relations, non-profit organization work, or translating.
     On campus, Jaclyn has been a cheerleader and has been involved in Student MOVE, Spanish Club, Alpha Mu Gamma (foreign language honor society), Student Ambassadors, the Vista and Emerging Leaders leadership programs, and a volunteer in the local schools. She has been on the Dean’s List every semester.

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