Last in an occasional series

Rachel Boutin graduated three years ago from the University of New England with a doctorate in physical therapy and $203,000 in federal student loans.

Today her student loan debt is actually increasing – she’s at $210,000 and counting – despite making $500-a-month payments.

She owes so much money she can’t afford the regular $1,400 payment on her $55,000 salary. She can’t even afford an interest-only payment. So she’s making an income-based payment, while her debt steadily grows.

“There’s not a day that goes by that I’m not thinking about my school loans and how bad they are,” said Boutin, who works at New England Rehabilitation Hospital of Portland. “It’s a terrible weight on my shoulders. I lose sleep over it.”

In the last decade, the superlatives and horror stories around student-loan debt have steadily increased: College tuition costs have significantly outpaced inflation and medical costs. The class of 2015 graduates are the most indebted ever: Student-loan debt, at $1.3 trillion, has surpassed all other consumer debt aside from mortgages. The average cost of a college degree is the highest it’s ever been. A generation of graduates, struggling to find jobs and saddled with student-loan debt, are putting off major life events like buying a home or getting married.

“At some point, the boiler reaches a breaking point,” U.S. Sen. Angus King, I-Maine, said of the soaring costs and student-loan debt. “College costs are going up but income is stagnating. It just becomes an overwhelming problem.”

The drumbeat of bad news has thrust college affordability into the national spotlight, even if there isn’t agreement on the best way to tackle the problem.

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President Obama set the stage for the vigorous debate in January, announcing a plan to make community college free for students using state and federal subsidies. In presidential politics, the 2016 hopefuls have made a point of staking out positions on college affordability, a tactic usually reserved for the economy, energy issues or crime.

In statehouses, lawmakers have tackled the problem by tying state higher-education funding to student outcomes or by requiring colleges to inform students annually of their debt. In Maine, a special college affordability committee met for months, then proposed a series of bills ranging from increasing aid to requiring the public colleges to adopt cost-cutting measures.

Virtually no one is satisfied with the status quo.

“We are setting up generations for failure,” said Rep. Matthea Daughtry, D-Brunswick, who co-chaired the college affordability commission. A member of the Legislature’s Youth Caucus, Daughtry said her own student-loan debt forced her to move in with her parents for almost two years after graduating from Smith College in 2009 with more than $20,000 in student-loan debt. An art major, she started her own photography business and worked three jobs to save money, and recently closed on her first house.

“I saw it firsthand, how difficult it was and how much (student-loan debt) set me behind in my life,” Daughtry said. “It’s a life sentence.”

‘THAT AMERICA IS GONE’

Democrats have rallied around the ideas of lowering college costs through higher state and federal subsidies, reforming student loans to allow for refinancing high interest rates, or preventing the federal government from profiting off federal student loans. Republicans have embraced proposals that include calling for more accountability for colleges, deregulating the student-loan market or making college tuition tax-deductible.

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A bipartisan “one-two punch” approach is needed, according to U.S. Sen. Elizabeth Warren, D-Mass., who shot onto the national political landscape as a freshman legislator with her call to reform federal student-loan rates.

“Democrats talk about resources, pointing out that we are no longer investing in our kids the way we once did. Republicans talk about risk and incentives, arguing that students take on debt without fully understanding the consequences and that colleges get access to federal dollars pretty much no matter the quality of the education they provide. The trick is, they’re both right,” Warren said in June, in a speech to the American Federation of Teachers. “Our college crisis needs a one-two punch: more resources and better incentives to keep costs low.”

“It’s time to dramatically reform higher education,” she said. “Graduating without big debt was a real possibility for every kid in this country. That America is gone, and the question is: How do we bring it back?”

POLITICIANS OFFER PLANS

In addition to promoting free community college, Obama signed legislation last year cutting interest rates on some federal student loans, tying the rates to the 10-year U.S. Treasury note, creating interest-rate ceilings and locking in rates for the lifetime of a loan. He also signed an executive order to expand a program that lets borrowers pay no more than 10 percent of their income every month for 20 years. After that, the balance is forgiven, but the borrower must pay taxes on the amount forgiven.

Congress has taken up a bill based on Obama’s community college proposal that would create a matching grant where the feds would kick in $2 for every $1 that states spend toward waiving community college tuition and fees for eligible students.

“Higher education should be a path to shared prosperity, not a path into suffocating debt,” a co-sponsor, U.S. Sen. Tammy Baldwin, D-Wis., said on July 8, when she introduced the America’s College Promise Act.

No-tuition community college plans are already in place in some states.

Obama’s proposal is modeled on the “Tennessee Promise,” a program launching this fall that uses lottery money to fund an endowment to pay the program’s estimated $35 million annual cost. In mid-July, Oregon adopted its own version of the plan, which is expected to cost the state an estimated $10 million a year to pay the “last dollar” costs that remain after federal and state aid.

King has introduced or supported several college affordability bills that have drawn bipartisan support, including the Repay Act, which simplifies federal student-loan repayment programs to one of two plans: a fixed repayment over 10 years, or an income-driven repayment plan over either 20 or 25 years, depending on the amount borrowed. That bill was backed by Republican U.S. Sens. Susan Collins of Maine and Marco Rubio of Florida, who is also a presidential candidate. King also introduced the Fast Act, which would simplify the process of applying for and receiving federal financial aid, allow year-round use of Pell Grants, discourage overborrowing and simplify repayments.

“(Student debt) is really becoming a serious burden on people leaving school. A lot of graduates have a mortgage, but they don’t have a house,” King said.

“The greatest engine of growth of the middle class is access to higher education,” King said. “We lose an enormous amount in our society if only rich people can go to college. We have got to figure that out.”

Among the Democrats running for president, U.S. Sen. Bernie Sanders of Vermont and former Maryland Gov. Martin O’Malley both have endorsed a tuition-free college plan. O’Malley admitted the issue is personal: He and his wife have taken out $339,200 in federal student loans for parents to pay for their two daughters to go to college.

Democratic front runner Hillary Clinton has not presented a specific plan but said during her campaign kickoff speech in June that she would work on college costs.

“Let’s make college affordable and available to all … and lift the crushing burden of student debt,” she said. At an education conference in March, she acknowledged that skyrocketing costs have begun to put college out of reach for many Americans.

“I worry that we’re closing the doors to higher education in our own country,” Clinton said. “This great model that we’ve had that’s meant so much to so many is becoming further and further away from too many.”

Republican front runner Jeb Bush, speaking at the same education conference, agreed: “Higher education in America has a growing affordability problem.”

More recently he has dismissed the idea of tuition-free college as “more free stuff” and instead said students could lower their costs by increasing their course load and graduating within four years.

Sanders introduced a bill in May to fund the $70 billion-a-year plan with two-thirds federal funds – paid for through a tax on transactions by hedge funds, investment houses and other Wall Street firms – and one-third from the states. The federal funds would replace all tuition and fees at public colleges, and be earmarked for teaching and hiring faculty. They could not be used to pay for administrator salaries, merit aid or construction on nonacademic buildings like stadiums and student centers. The bill would also expand work-study programs and allow students to refinance their loans.

“It is time for a fundamental change in how we approach the financing of higher education,” Sanders said at the time. The bill would also eliminate federal profits on student loans and expand work-study programs.

Other Republican presidential candidates are also presenting college affordability proposals.

Sen. Lindsey Graham of South Carolina and former Arkansas Gov. Mike Huckabee support letting borrowers refinance federal student loans, and Sen. Rand Paul of Kentucky has called for all college expenses to be tax-deductible.

THE STATES STEP IN

Across the nation, state lawmakers are chipping away at the issues, too.

Approaches vary, but since state lawmakers hold the purse strings for public colleges, many reforms have tied those funds to schools meeting certain benchmarks.

Thirty-two states, including Maine, already have a funding formula that allocates a portion of higher education funding based on performance indicators such as course completion, time to degree, transfer rates, the number of degrees awarded, or the number of low-income and minority graduates. Five more states are adopting a performance-based funding formula.

Other states have taken aim directly at student debt. A new law in Indiana, signed by the governor this month, requires public universities to inform students in an email or letter every year about how much they owe in student loans.

In Maine, Daughtry said the lawmakers on the college affordability commission achieved their top goal to increase the Maine State Grant award, and got more overall funding approved for higher education. Other bills made minor adjustments, such as increasing a college tax credit, and requiring public colleges to adopt efficiency standards, she said.

“I think we really had a good strong start, but we have a lot of work going forward,” Daughtry said.

Rep. Matthew Pouliot, R-Augusta, said he supports a mix of increased state investment along with reform measures, and opportunities for graduates to refinance high-interest student loans. He tried, but failed, to get a $5 million state bond to help Maine residents refinance high-interest student loans.

But all those things come with a price tag.

“We all have our own ideas of what things should cost,” said Pouliot, who was also on the college affordability commission. “At the end of the day, the facts are the facts: The costs are rising exponentially, and unless we as a state invest in (higher education), the costs will continue to rise.”

Pouliot said it’s unrealistic to think the state will significantly increase funding for higher education, given the state economy. But lawmakers can focus on overseeing the public systems.

“What we can control is the affordability of our Maine campuses, and what we’re prioritizing is less ivory tower and more about providing a good education at an affordable rate,” Pouliot said.

The schools themselves have adopted new programs and policies aimed at helping students get through their college years more efficiently – keeping costs down without wasting time and tuition money – and helping them stay in school, since dropouts face the double penalty of incurring debt without receiving a diploma.

Currently, about 79 percent of freshmen return the following year at the University of Maine. The target retention rate is 85 percent, said Provost Jeff Hecker.

“It’s the right thing to do and it will also help us with our budgetary challenges,” Hecker said.

The schools also want to help students graduate within four years, avoiding a costly fifth year of student-loan debt.

The University of Maine is launching a “Think 30” program this fall to encourage students to take at least 30 credit hours every year, Hecker said. To graduate on time, students should take 15 credit hours per semester, but 12 is considered full-time. Currently, more than a third of UMaine students end their freshman year with fewer than 30 credits.

The public schools are also making it easier to transfer between two-year and four-year schools. That means a student can go to the lower-cost community colleges to begin college, or a four-year student in danger of dropping out can switch gears and get an associate degree.

‘I GAVE UP MY AMERICAN DREAM’

Boutin is looking at 25 years of payments that will adjust depending on her income.

When it ends, when she’s 50 years old, the remaining balance will be forgiven, but she’ll have to pay income tax on the amount that is forgiven.

Rachel Boutin, a physical therapist at New England Rehabilitation Hospital, amassed staggering debt as she pursued an education. What she owes is actually growing, even as she makes $500 monthly payments.

Rachel Boutin, a physical therapist at New England Rehabilitation Hospital, amassed staggering debt as she pursued an education. What she owes is actually growing, even as she makes $500 monthly payments. Gabe Souza/Staff Photographer

“I’m so terrified that in 25 years I am just going to be so screwed,” said Boutin.

Boutin said she’s torn between loving her job as a physical therapist and hating her debt.

“I don’t think I’m ever going to be able to buy a house,” she said. “I would love to travel, but I don’t feel like I can spend that money.”

But she wouldn’t want to stop working with stroke patients in acute rehabilitation therapy.

“They can’t talk. They can’t eat. I see them every day and I teach them to walk again, to stand up and get out of bed. I help them get home again,” she said. “I feel like I gave up my American dream of owning a home to help other people get into their homes.”