S.D. candidates split on how to pay for college

A federal loan program that's helped thousands of lower- and middle-class South Dakotans pay for college will go away next year if Congress doesn't act.

That means whoever voters send to Washington next year will have a say in the future of financial aid.

The need-based Federal Perkins Loan Program helped more than 3,100 South Dakotans pay for college in 2014-15, with an average of $1,843 per student.

All four of South Dakota's congressional candidates — Sen. John Thune, Rep. Kristi Noem, and their Democratic challengers Jay Williams and Paula Hawks — want to renew the federal loan program in some form, but their views on how government should help students pay for college vary from there.

Williams said he wants to enact universal free tuition, similar to Bernie Sanders' model, while his opponent, Thune, sees tax breaks and better financial planning tools for families as solutions. Hawks wants lower interest rates for student borrowers, while Noem wants to keep them linked to treasury bonds.

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The candidates' views on college affordability will weigh on the minds of voters like Sara Telahun Birhe, 18, a student at Augustana University in Sioux Falls.

Telahun Birhe took out a $10,000 federally subsidized loan to pay for her first year of college. She's working three part-time jobs with plans to pay off half of that loan this year. She's considered taking out private loans so that she can focus more on her studies, but she is worried about lasting debt.

"I worry about if I don't get a job in the first six months, if I'll have this debt," said Telahun Birhe, a registered Independent who said she plans to vote for Hawks and Williams.

Kade Lamberty, a fifth-year student at the University of South Dakota, said he has used Pell grants and various federal loans to pay for his tuition.

"I wouldn't be able to pay for it if it weren't for the student loans," he said. "It's just going to be a long time to pay everything back."

But Lamberty said he didn't think federally subsidized free tuition is the answer as it would drive up taxes across the board. Instead, he said, he'd like to see interest rates come down and states take a more active role in administering the loans.

The business administration major and president of the University of South Dakota College Republicans said he's keeping his eyes open for jobs that offer student loan repayment plans. He said he plans to vote for Noem and Thune in November.

Noem and Thune said they want to make higher education expenses more transparent for students and families as they consider whether and where students might enroll.

“We want to make sure that they become better shoppers," Noem said. "I know college is expensive, but if families know what they're up against, they can make better decisions on saving."

And families saving for college should get a tax break for their efforts, the Republicans said.

Hawks, Noem and Thune all oppose making higher education free, arguing that students value their education more when they have to invest money in it. They said removing that aspect would be detrimental to students who want to work hard and professors who want enthusiastic students.

“I think that just giving something away, giving a college education for free, that isn’t teaching them anything," Thune said.

While existing federal aid helps, it doesn't cover the national average in-state college cost of $24,061 this academic year, Williams said. He said Congress should hike taxes to make public university tuition free.

“To saddle a 22-year-old with a six-figure debt just coming out of college and looking for a job isn’t acceptable, and Congress can do something about it," Williams said. "California used to be tuition free. ... We absolutely could do that and should do that."

Hawks, Noem and Thune said they would rather see Congress make sure interest rates for federal student loans stay low, as well as work with private employers to maintain or expand loan forgiveness programs for understaffed professions and areas.

“We can’t strap our college students who are just trying to find jobs and are just starting to become active parts of the economy, we can’t straddle them with outrageous costs and interest rates on their student loans,” Hawks said.

Congress sets interest rates on federal student loans, and in 2013, it voted to tie the interest rates to 10-year federal treasury notes. That means borrowers now take on market-based interest rates. When the Federal Reserve hikes interest rates, new borrowers and those with variable interest rates see additional debt for college loans.

Hawks and Williams said they want to see the interest rate brought down further, but Noem and Thune said the move to tie the interest rate to the treasury notes has already provided significant relief to borrowers.

Kenneth Kocer, director of financial assistance at Mount Marty College and former president of the South Dakota Association of Student Financial Aid Administrators, said Congress should focus on maintaining programs for needy students including Perkins loans. Congress has voted to let the Perkins loan program lapse in 2017, but hasn't set up an alternative funding structure.

"Simplification sounds good, but if it means students are losing financial aid opportunities," he said, "that's a real problem."

Follow Dana Ferguson on Twitter @bydanaferguson, call (605) 370-2493 or email dferguson@argusleader.com

Candidates on making tuition affordable

Kristi Noem

Noem said making college tuition free is unrealistic as the federal government is already overburdened and ineffective. She said she likely wouldn't support it as it would require raising taxes. She said students should have access to additional information about the costs of higher education so they can become "better shoppers" and tax breaks for college saving should be preserved.

“There are already a lot of commitments that the federal government is responsible for and they’re not always following through,” Noem said. 

Paula Hawks

Hawks said she wouldn't back a free tuition proposal as she thinks students work harder when they have to pay for part of their education, but she thinks the interest rates on federal student loans should be more affordable and loan forgiveness programs should be more common.

“We can’t strap our college students who are just trying to find jobs and are just starting to become active parts of the economy, we can’t straddle them with outrageous costs and interest rates on their student loans” Hawks said.

John Thune

Thune said students and families should have more access to the real costs of higher education before they start taking out loans. He said there's value in requiring students to put a financial investment into their education, but it should be manageable. Thune said he's working on a proposal to incentivize employers to pay of parts of employees student loans.

“I think that just giving something away, giving a college education for free, that isn’t teaching them anything," Thune said.

Jay Williams

Williams said Congress should authorize raising taxes so that college tuition could be federally subsidized. He said if that proposal isn't approved, the federal government should drop the interest rates on student loans and provide more loan forgiveness programs.

“To saddle a 22-year-old with a six-figure debt just coming out of college and looking for a job isn’t acceptable and Congress can do something about it," Williams said. "California used to be tuition free. ... We absolutely could do that and should do that."