DiNapoli report: college student-loan debt doubled in New York over last decade

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Student-loan debt in New York state more than doubled during the last decade to $82 billion from $39 billion, as more people attended college, borrowing money to do so, and tuition spiked. That’s according to a recent report issued by New York State Comptroller Thomas P. DiNapoli. The comptroller’s report found that the average New […]

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The comptroller’s report found that the average New Yorker with college loans owed $32,200 in 2015, higher than the national average of $29,700.

“New Yorkers saddled with college debt have less disposable income and often have to push off buying a home or saving for the future. Such struggles have implications not only for those individuals and families with such debt but also for the state’s economy,” DiNapoli said in a news release announcing the report’s findings.

The number of student-loan borrowers in New York has risen by more than 41 percent over the past 10 years to 2.8 million. Nationwide, the number of borrowers rose by nearly 60 percent to 43.7 million.

Student loans represented 11.4 percent of the $722 billion in outstanding consumer (or household) debt in New York in 2015, according to the comptroller. Figures on student loans do not include other debt that families and students incur to pay for college such as taking out home-equity loans, borrowing from retirement accounts, or using credit cards.

Rising college costs are a major factor in the growth of student-loan debt. From 2005-06 through 2014-15, average costs for tuition, fees, and room and board for four-year colleges and universities in New York rose by more than 50 percent for both state schools and private colleges, according to the report.

In 2005-06, the average cost in New York for full-time undergraduate tuition, fees, room and board for New York residents at a public college was $13,275. That shot up 55 percent to $20,549 in 2014-15.

Those same costs for New Yorkers attending private colleges rose 50 percent from $32,478 in 2005-06 to $48,845 in 2014-15.

While individuals’ student-loan debts vary significantly among local areas in New York, the report found that individuals with higher loan balances were concentrated in downstate areas, where the cost of living is higher.

In 2015, Manhattan led all areas of the state with an average student-loan borrower balance of $44,500, followed by the Lower Hudson Valley at $36,000.

CNY balances
Among Central New York regions, the Ithaca area had the highest average student-loan balance in 2015 at $29,900, up 32 percent from 2006.

The Syracuse area had an average loan balance of $29,200 in 2015, up 57 percent since 2006, according to the DiNapoli report.

In Binghamton, the average loan balance was $28,000 in 2015, up nearly 64 percent.

The Utica–Rome and Elmira regions each had an average student-loan balance of $26,400 in 2015, up 60 percent and 74 percent, respectively, since 2006.

The Watertown–Fort Drum area ranked lowest among Central New York regions and all of New York state areas for which data are available, with an average balance of $23,500, up 45 percent in the last decade.

The proportion of student-loan borrowers in New York and the nation whose payments were 90 or more days late rose over the past decade, according to the report. The share of borrowers with late payments in New York jumped from 8.9 percent in 2006 to 14 percent by 2012, but fell to 12.5 percent in 2015, which was still substantially higher than in 2006.

Among Central New York regions, the percentage of student-loan borrowers who were 90 or more days late in payment in 2015 ranged from a low of 9.1 percent in Ithaca to a high of 14.2 percent in Elmira. Those numbers were all higher than in 2006 but lower than 2012 levels.

Contact Rombel at arombel@cnybj.com

Continuing Education, Information is Key to Risk Management

Business Mentors, Health Care, Insurance & Financial Services, Law, Accounting & Taxes, Subscriber Only

With the start of every new academic year, and the focus of education on so many people’s minds, it is a good idea to revisit your own plan for continuing development of your business. This is an opportunity to see if you are keeping up with the latest information relevant to your success and reducing

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Risk is the reason to get it off the shelf
Risk is a common and accepted part of any small business startup and operations — just ask any business developer. Entrepreneurs, educators, and small business technical-service providers commonly quote statistics detailing the failure rates of startups. Bureau of Labor Statistics data shows that about two-thirds of businesses survive at least two years (which translates into a 33 percent failure rate within two years) and about half survive at least five years (50 percent failure rate within five years).

Is there a way to improve the odds of becoming a success rather than a failure? One best practice is the continual review and revision of a risk-management component in your business plan. This action step requires an ongoing acquisition and ordering of new information that relates to your operations.

Two of the top five reasons that Investopedia gives for business failure are “rigidity” and “business plan problems.” So many people mistakenly put a finished business plan on the shelf and fail to update it and use it as the tool it was intended to be used. A risk-management component provides a good reason to regularly keep yourself educated in your field, so take that plan off the shelf for an annual review, and make adjustments for the next year.

Risks, resources, strategies, and metrics
Not only is it a good idea to identify and analyze risks to your business and include them in your written plan, but it’s also a good idea to include an inventory of your available resources, strategies, and measurement criteria. These four components of risks, resources, strategies, and metrics will combine to determine if you are meeting the required baselines you have identified as necessary to overcoming key potential risks to your particular business.

Outside secondary sources are a good place to start when looking at risk components to your business. Most all business types have an associated industry organization that undertakes regular research, news reporting, and communications with its members. Membership almost always comes with a price tag to the business owner, but then again, what doesn’t? The benefits can be huge though in keeping you up-to-date in business-specific areas that are relevant to risk management, such as technological advances in equipment and IT systems, changes in laws, competitor innovations and unique initiatives, and more.

When you move on to inventorying your resources and assets that will help you with managing potential risks, nothing is as simple as the classic SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis. Performing your SWOT analysis can help you identify additional aspects specific to your unique business that might be overlooked by the outside secondary sources you peruse. This is a good opportunity to interact with your employees, customers, and partners to obtain first-hand feedback and accounts of experiences.

The U.S. Small Business Administration identifies the following possible key strategies to reducing risk: communication, setting expectations, support systems, staff training, insurance, risk assessment, and contingency planning. We’ve already mentioned how a few of these fit in, such as communication when performing the SWOT analysis, or risk assessment when educating yourself on the latest news in your field. Determining how you will incorporate these strategies into your business plan will provide you with a clear set of action steps with which to move forward.

Finally, how will the changes to your operations as identified through your risk-management plan affect your proposed financial metrics and timelines? A business plan is essentially a feasibility study. What does your vision look like when put on paper, with enough information to corroborate your assumptions and meet your goals and objectives? This feasibility analysis will be affected by every new risk or change to a previously identified risk about which you must be aware. Therefore, you must update your metrics and timelines and adjust your operations as necessary in reaction to those updates.

If you look at your business plan as the repository of your risk-management business component — which can be influenced continually by the latest news, trends, and events — it can become an invaluable piece of your operational framework.

Frank Cetera is a New York State Small Business Development Center (SBDC)-certified business advisor at the SBDC at Onondaga Community College. Contact him at ceteraf@sunyocc.edu

Addressing college affordability

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New York State Comptroller Thomas DiNapoli recently released a report that indicates that over the last decade, student-loan debt for New Yorkers has grown by more than $10,000 for the average borrower. According to the Brookings Institution, Americans now owe a record $1.3 trillion in student loans, and student loans are second only to mortgages as

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It’s not a mystery why student debt is exploding. It’s because of the incredible increases in the cost of higher education. In 1980, the average cost of tuition, fees, and room and board at a private 4-year college was $16,143 (in 2015 dollars). That cost soared 172 percent to $43,921 by 2015-16. Sadly, these increases aren’t limited to just private universities. The average cost of tuition, fees, and room and board at 4-year public colleges in 1980 was $7,362 (in 2015 dollars). The cost jumped 166 percent to an average of $19,548 in 2015-16. Simply put, the growth in college tuition and fees has outpaced the growth of housing prices, consumer prices, and the average hourly wage.

The higher cost and huge debt load needed to cover it have many people wondering whether higher education is worth the economic return. While overall, unemployment rates are lower and weekly earnings are higher for those who have college degrees, it’s also true that the vast increases in student debt associated with obtaining these degrees is eroding these benefits. Further, as our economy continues to struggle, many college graduates are underemployed — that is, they tend to work in jobs that don’t require a college degree. It has been estimated that in 2012, 1 in 3 college graduates had jobs that required a high-school diploma or less.

Answering why college costs have increased so much is complicated. In my opinion, it’s probably due to a combination of factors. First, there is strong competition among universities for high-quality faculty and students. In order to attract faculty and students, colleges are spending large amounts of money on higher salaries, more services, and more amenities. Second, the institutions are engaging in tuition discounting, which is essentially the practice of charging different students different prices for the same educational opportunities. These discounts are given for a variety of reasons such as merit or financial needs. To cover this cost, colleges are ratcheting up the tuition on those who don’t qualify for the discounts. Lastly, due to the very nature of higher education, unlike a private business, there is little incentive to improve productivity and efficiency that could lower costs.

Ultimately, what most people can agree on is that the current system is unsustainable. More and more people are going to ask what is the cost benefit of a college degree. If institutions of higher education cannot answer this question, they will lose students and their viability will be in jeopardy. In order to address this and bring accountability to universities, I support legislation that would require any higher-education institution receiving state funding to disclose information to students that would among other things, show: (1) the average post-degree earnings broken down by program of study; (2) the percentage of students with student-loan debt upon graduation and for students who do not complete a program of study; (3) the student-loan default rate; (4) a financial-aid breakdown by student type and specific programs of study; and (5) the percentage of students who received the degree level initially sought.

Providing this information would give students a clearer understanding of the economic costs and benefits of the colleges and programs that they are considering. In addition, it would put pressure on universities to clearly express the benefits of their programs. This in turn, may force them to reconsider their tuition policies. This is only a first step. The sheer enormity of student debt and the increasing default rates are going to require state and federal policy makers to address the issue. When considering policy changes, whatever we do, we want to make sure that all students, who are so inclined, have an opportunity to attend college. At the same time, we will need to encourage colleges to institute tuition policies that make higher education affordable without needing huge government subsidies or massive loans.

William (Will) A. Barclay is the Republican representative of the 120th New York Assembly District, which encompasses most of Oswego County, including the cities of Oswego and Fulton, as well as the town of Lysander in Onondaga County and town of Ellisburg in Jefferson County. Contact him at barclaw@assembly.state.ny.us, or (315) 598-5185.

A Sobering Look Beyond the Election

Opinion, Subscriber Only

This campaign year has been full of twists and turns. We don’t know what’s going to happen tomorrow, let alone on Nov. 8. So talking about what comes afterward seems premature. But it’s been on my mind a lot, because I’m worried. This is not about who wins the presidency. I’m concerned about the aftermath

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This is not about who wins the presidency. I’m concerned about the aftermath of this campaign season and how hard it’s going to be for our next set of elected officials, from the president on down, to govern.

Let’s start with the belief expressed by a lot of people — including some candidates — that the system is “rigged.” This is a perilous way to treat the country’s political system. It sows distrust in future election results, de-legitimizes winners, and undermines the government’s credibility. Without a basic foundation of trust, representative government crumbles.

Instead of taking aim at “the system,” we could instead focus our criticism on politicians, including the two presidential candidates, who have failed to serve us well in their debate on the economy.

Much of the election has revolved around immigration, trade, and other issues of the moment. But our real economic challenge is how to provide meaningful work and good wages to 10s of millions of people whose jobs are disappearing because of globalization, automation, and other irreversible changes in how work is accomplished. Economic growth is the key that unlocks many doors and is the preferred course to ease the anxiety and cynicism abroad in the country.

The problem is, this election isn’t providing us with a substantial policy debate on that or any other issue. Indeed, if anything characterizes this election, it’s the politics of personal destruction. This approach is toxic for democratic institutions and political culture. We have to be able to disagree in this country without tearing into and trying to destroy the opposition.

All of this — the attacks on the system, the lack of meaningful debate about improving Americans’ economic future, the generally substance-free nature of the campaign, and the politics of demonization — will make it very hard for whoever wins office to govern well.

It used to be that when a president came into office, a substantial majority of the American people gave him the benefit of the doubt, and with it an extended period in which to get things done. I don’t believe that’s going to happen after this election. And all Americans will be worse off as a result.

Lee Hamilton is a senior advisor for the Indiana University (IU) Center on Representative Government, distinguished scholar at the IU School of Global and International Studies, and professor of practice at the IU School of Public and Environmental Affairs. Hamilton, a Democrat, was a member of the U.S. House of Representatives for 34 years, representing a district in south central Indiana.

Christopher Timmons

People on the Move, Subscriber Only

Fust Charles Chambers LLP has hired CHRISTOPHER TIMMONS as an audit associate. He joins the firm with more than one year of experience in the public accounting industry in New York City and Long Island. Timmons received his bachelor’s degree and his MBA in accounting from SUNY Oswego. He is currently working to complete the certification process

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Jason M. Held

People on the Move, Subscriber Only

Grossman St. Amour CPAs PLLC has hired JASON M. HELD as a staff accountant in the audit group. Held works with not-for-profit organizations, public school districts, and employee-benefit plans. He previously completed the Grossman St. Amour internship program in 2016. Held holds an MBA and a bachelor’s degree in accounting from Le Moyne College. He is retired

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Rebekah Walsh

People on the Move, Subscriber Only

NBT Bancorp has hired REBEKAH WALSH as VP and finance manager. She is based at the company’s Norwich headquarters. Walsh has 10 years of experience in the financial-services industry. Prior to joining NBT, she was audit manager at Deloitte & Touche, LLP. Her previous experience includes positions in the auditing departments at the Saint-Gobain Corp. and PricewaterhouseCoopers

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KeyBank

People on the Move, Subscriber Only

KeyBank has named JASON HOLCOMB and MICHAEL MADIGAN, JR. area leaders of retail banking for the Central New York market, responsible for branch administration and sales management. Holcomb previously was a multisite branch manager for First Niagara Bank in Rochester. He also worked as regional manager for Citizens Bank in Albany. Holcomb earned his associate degree in education from

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CenterState CEO

People on the Move, Subscriber Only

CenterState CEO has hired KARA ALHEIM as its content and marketing manager, and NAJEE RAHMAN as its digital-communications manager. Alheim will also provide direct support to the Tech Garden staff for its GENIUS NY program. She most recently served as the tourism and public information officer for Oswego County. Alheim holds a master’s degree in integrated marketing communication from

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Gregory Knight

People on the Move, Subscriber Only

GREGORY KNIGHT recently joined Sterling Financial Group as a financial representative. He earned the professional designations of chartered financial consultant and chartered life underwriter from the American College in Bryn Mawr, Pennsylvania. Knight has more than 16 years’ experience in the insurance and financial-services field as an agent and manager. Contact The Business Journal News Network at news@cnybj.com

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