trojan
Volume CVI, Number 10	University of Southern California	Monday, January 25, 1988
		
	A SPECIAL REPORT	
Debt crisis: Students burdened by loans
By Kathleen Berry
Staff Writer
The university has quietly changed the character of its financial aid packages from mostly scholarships to mostly loans, leaving many graduates with a crushing debt burden that may discourage students from pursuing lower-paid careers in public service.
Of the nearly 10,000 undergraduates who receive financial aid, those students will, on average, be more than $20,000 in debt upon receiving a diploma, based upon the amount of loans meted out to university students during the 1986-87 academic year.
At this rate, based on current interest rates of 8 percent, students can be expected to pay an average of S242 per month for 10 years to pay off their loans.
The university claims its policy’ is to meet 100 percent of a student's demonstrated financial need. But 30 percent of that need is met through self-help loans, said Ed Mervine, associate director of financial aid. In effect, this policy defers a significant part of a student's financial need into the future.
"The university has a very difficult problem because financial aid could break the university," said Clark Howatt, dean of the School of Engineering. Howatt recruits students and administers financial aid for the engineering school.
"The financial aid problem is created by increasing financial eligibility of students, decreasing federal support and, hence, greater family and university burdens," he said.
In the past five years, the university's financial reports show that student gift
aid has dropped one-fifth. In 1981-82, gift aid amounted to 62 percent of the average financial aid package. Today, gift aid
—	grants and scholarships that need not be repaid — comprises 53 percent while self-help makes up 47 percent of a total aid package.
But university gift aid, which totals $30 million in 1987-88, comprises only 7 percent of the annual university budget — a share that records confirm has remained constant since 1977.
Reagan administration have also contributed to the drop in gift aid.
"A full package means 100 percent of need was met — 100 percent does not mean everything was paid, just that demonstrated need was met," Mervine said. "Almost all of on-time financial aid applicants, 95 percent, had their full need met."
On Nov. 24, the Student Senate held a "Mad as Hell" rally to denounce the university's slowness in distributing finan-
'The university has a very difficult problem because financial aid could break the university/
— Clark Howatt, dean of the School of Engineering
For every dollar the university provides as gift aid, a student now spends $8.80 on tuition and fees, based on calculations from university records. A decade ago, students paid $6 for every $1 awarded by the university.
Students' fees provided more than 61 percent of the university's budget this fiscal year. The budget is $426 million, of which the largest share, $263 million, comes from student-paid tuition and fees.
Loan dependence a national trend
Mervine said the reduction in gift aid, part of a national trend, has been attributed to the dramatic rise in college costs in faculty and research facilities.
Cuts in federal assistance during the
rial aid. About 200 students attended the rally.
Darren Abe, financial affairs chairman of the Student Senate, attributed most of the problems to "student irresponsibility."
"A lot of the students claim they handed in their materials and the financial aid office didn't get them," Abe said in an interview last week. But "there are a lot of students who blatantly file late."
Thousands of students unpackaged
University officials acknowledge that financial aid had administrative and computer problems last semester but also say that two-thirds of all financial aid applicants were late sending in their forms, which exacerbated the problem.
"I think we need to own up to errors, to be up front with students. And I think sometimes students are made to pay the price for our deficiencies," Howatt said in reference to the financial aid office.
The upcoming May 1 deadline to submit financial aid materials is also expected to be a problem as it was last year, he said.
"How can you expect a student to submit a certificate of intent to register by May 1 when they don't have a financial aid package on which they are dependent for entering the university?" Howatt asked.
The financial aid office packaged 3,691 late applicants to "100 percent of their need," but 2,753 students were not packaged when their applications were late, Mervine said.
Although the short-term administrative foul-ups angered a lot of students, the larger issue is the fundamental change in poGcy at the university and many other colleges, public and private, from scholarships to loans.
This shift has created an estimated $3.6 million in Guaranteed Student Loan defaults by former university students.
Of the 9,600 university undergraduates who receive financial aid, nearly all have student loans, Mervine said. Approximately 7,000 undergraduates receive no financial aid.
Loan default rate rising
As reliance on loans has grown in recent years, the default rate by students across the country has escalated.
The U.S. Department of Education announced in November that colleges and (Continued on page 5)
Cal State L.A. paper may face extinction
By Brad Bowlin
Staff Writer
The grim situation faring the student newspaper at California State University Los Angeles got a little worse Friday when university administrators discovered the University Times' deficit is worse than previously believed.
The Times faces possible cutbacks and even extinction because it lacks the money available to keep it afloat.
Bobby Patton, dean of Cal State L.A.'s College of Arts and Letters, said the paper was in a "critical situation" at a meeting with communications department chairman Keith Henning and journalism faculty members.
Staff members are currently waiting for the university's Instruc-tionaily Related Activities (IRA) board to deride whether it will grant the newspaper $23,000 in relief.
But even with that money, the newspaper would still face a deficit of nearly $57,000, Patton said.
The situation could become even worse because advertising revenues may not meet projections, said Joan Zyda, the newspaper's publisher.
Because the newspaper is no longer a daily — the Tuesday edition was eliminated in an effort to cut costs — several advertisers have left the Times and new advertisers have been difficult to find, she said.
The newspaper's financial woes have been building fof three years, during which the staff has had severai publishers — three in the past year and a half.
In addition, the Associated Students of Cal State L.A. withdrew $13,000 in advertising last summer.
The journalism faculty must now deride whether limited funds should go toward rescuing the Times or toward staffing. Any department funds fed to the Times would be "at the expense of part-time people" needed to teach journalism classes for the spring quarter, Patton said.
"Any way we go, we pay a price," he said.
Some suggested eliminating the newspaper and adding its operating funds to the budget of L.A. Headlines, a campus news broadcast, while others said the paper should be expanded and made into an advertising-based, community service paper. _________________________________________________(Continued on page 3)
'Underdog’ for U.S. Senate returns from Nicaragua trip
By Catherine Loper
Staff Writer
Bill Press, the man who loves "being the underdog" in the race for a U.S. Senate seat, returned Friday to Los Angeles from observing a recent summit of Central American presidents.
Press, a Democrat, said he will base his campaign around addressing "the issues," focusing on matters of "environment, education, health care — and Central America."
"Once the Democrats see there's a new, fresh alternative to the tired, stale alternatives of the past — I will succeed," he said.
Press once served as director of the Office of Planning and Research in the cabinet of former California Gov. Edmund "Jerry" Brown Jr. for four years.
He then worked as a political commentator for ABC. His commentaries were aired on KGO radio in San Francisco and KABC radio and television in Los Angeles.
In his quest to become a senator, Press must defeat Lt. Gov. Leo McCarthy, who has also announced his candidacy. The winner of the Democratic primary in June will try to oust Republican incumbent Pete Wilson.
Although some Democrats feel the party would have a better chance beating Wilson with a
united front of one candidate rather than two, Press said, "I believe that if Leo were to run unopposed, he would still lose to Pete Wilson.
"I can beat Pete Wilson. McCarthy can't," he said, emphasizing it is most important that the Democrats obtain the Senate seat.
"Basically, McCarthy and Wil-
BILL PRESS
son are the same politician — one wears a red tie, one wears a green tie, but they both wear the same gray suit," Press said.
Press believes he is not that same politician. "I am not a boring politician. I am not a do-nothing politician," he said.
Press was invited to San Jose, Costa Rica, by the Costa Rican government to observe the Jan.
15 summit of Central American presidents. During the summit, the presidents renewed their commitment to comply with the Guatemalan Accord. The ultimate objective of the agreement, which was signed by the presidents in August, is peace in Central America.
Four out of five of the countries had not yet complied with their part of the treaty at the time of the second summit.
The countries had not yet complied with the Guatemalan Accord because the deadlines the presidents had set for themselves to "change a decade of problems" were not realistic, Press said.
The summit was held, he said, to answer the question of whether the whole peace effort in Central America was going to fall apart.
It was "a declaration of independence on the part of Central America," Press said. "The countries were saying, 'We want peace. We want to do it ourselves. We want the United States out of our way.' "
Press traveled to Managua, Nicaragua, on Jan. 17 after the summit to see if Nicaraguan President Daniel Ortega complied with his earlier pledges.
One day after Press' arrival, the state of emergency in Nicaragua was lifted. Ortega made (Continued on page 3)