April 23, 2012

Maine Voices: State, federal programs join forces to ease burden of student debt

Better-educated young people can help improve Maine's business climate and reduce welfare costs.


PORTLAND - As students are gearing up to graduate from Maine's colleges and universities, they're thinking about what to do with their futures. Unfortunately, overshadowing all of their dreams is the specter of student debt.


TO LEARN MORE about the opportunities to make higher education affordable for all, come to Bayside Bowl at 58 Alder St., Portland, on April 30 at 6 p.m. for Opportunity Maine's Drop the Debt event.

The high cost of higher education is not just a personal financial problem; it is a political problem that affects our ability to grow the economy. Research shows that, over the next decade, nearly all of the growth in high-wage jobs in Maine will require education beyond high school.

And yet, support for higher education has been slashed, costs have skyrocketed and unscrupulous private lenders have rushed in to fill the void. Consider these facts:

From 1990 to 2010, Maine's public funding per full-time university student has been slashed by more than one-third.

In 2010, 68 percent of Maine college graduates went into debt to earn their degree, averaging $29,983 -- the second-highest student debt of any state, and the highest as a percentage of income.

People struggling with student debt have been stripped of basic consumer protections, leading to widespread abuse by private lenders.

The benefits of higher education couldn't be clearer. Put simply, the more you learn, the more you earn. Mainers with an associate or a bachelor's degree earn 39 percent and 63 percent more, respectively, than workers with only a high school diploma. The unemployment rate is 6 percent for those with an associate and 3.5 percent for those with a bachelor's, but is more than 13 percent for workers with only a high school diploma.

Pursuing higher education not only improves the lives of individuals and their families, but also improves Maine's business climate, creates more higher-income taxpayers, cuts welfare costs and helps more young people start their careers, businesses and families here.

Recently, greater awareness of the impact of skyrocketing college costs has led to some impressive efforts at both the state and national levels to address the problem.

Thanks to a citizen initiative a few years ago, Maine now has the boldest college affordability program in the nation. Opportunity Maine has a simple, but powerful message: If you put in the hard work of getting a college degree and commit to living and working in Maine, the program will wipe out most, if not all, of your student debt!

The program allows those who earn an associate or a bachelor's degree at a Maine school to be reimbursed for student loan payments through a state income tax credit for any years they live, work and pay taxes here after graduation. Alternatively, businesses that pay employees' education loans as an employee benefit can claim the tax credit. The credit is called the Educational Opportunity Tax Credit.

At the federal level, several new initiatives can help people afford the education they need:

Income-Based Repayment is a "pay as you earn" program that caps monthly student loan payments based on income.

Special Direct Consolidation Loans offer big savings but are available only for a short time.

Public Service Loan Forgiveness eliminates remaining student debt after 10 years for those who pursue public-sector or nonprofit careers.

The American Opportunity Tax Credit provides up to $2,500 per year for college costs for up to four years.

The new Consumer Financial Protection Bureau is assisting student borrowers with financial literacy initiatives and new protections from predatory lenders.

As well, financial aid offices should make sure that students exhaust all forms of federal aid before suggesting they turn to private loans, which come with much higher interest rates and few consumer protections. According to the Project on Student Debt, "the most recent federal data show that a majority of private loan borrowers could have borrowed more in federal loans before turning to private loans."

All of this is incredibly helpful and has put a college education within reach for many more people -- assuming they know about these opportunities!

Much more needs to be done to keep tuition and student debt in check, but in the meantime, students, parents, teachers, businesses and colleges and universities should help make sure everyone understands the opportunities that are available to afford the education they need. The well-being of our state and economy depend upon it.

Rob Brown is the executive director of Opportunity Maine, a statewide nonprofit promoting investments in Maine's people, communities and economy.


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