Access to a college education remains the best way for Mainers to boost their lifetime earnings and economic well-being. Yet too often, the cost of college is a barrier to completion or even enrollment. MECEP supports LD 860 — “An Act to Establish the Maine Community College System No-cost Tuition Program” — to help close the affordability gap for many Maine students.
LD 860 would create a new grant program for first-time college Mainers who are students at Maine’s community colleges. The grant would cover the cost of tuition and fees after accounting for any other grants and scholarships a student may have applied for. This would effectively make the cost of tuition and fees free for almost all in-state residents of Maine’s community colleges.
Cost is an obstacle that stops many Mainers from earning a college degree. This barrier is particularly hard to overcome for the Mainers who would most benefit from a college education — people of color, those who are the first in their family to go to college, or those who are from families with low incomes. When college is unaffordable, many of these Mainers don’t earn the degree or certificate that could improve job prospects and income.
Many of us think of community college as the affordable route to higher education. But while tuition in Maine’s Community College System is lower than in the University System, it can still cause students to incur large amounts of debt. Data from the U.S. Department of Education reveals that the average debt for graduates of Southern Maine Community College is $10,500, and that half of all borrowers have not yet paid down a dollar of their principal balance even three years after graduation.[i]
Americans now owe more than $1.5 trillion in student loan debt,[ii] with one in five Mainers having student debt totaling $6 billion altogether.[iii] While students with financial need typically qualify for some subsidized federal loans, much of the debt held by borrowers is composed of private student loans. These loans have higher interest rates than federal Stafford loans and haunt college graduates for years after getting their degree. Americans are increasingly resorting to these private loans. In 2017-18, U.S. students borrowed $11.6 billion in private loans — twice as much, in real terms — as they borrowed in 1997-98.[iv]
The cost of attending post-secondary education is a barrier students must clear every year they are enrolled, and even when students overcome the high cost of attendance as freshman, they may not in subsequent years. Many students who successfully enroll in higher education end up dropping out later for financial reasons. Today, one-fifth of Maine adults have some college education, but no degree.[v]
. This investment in education today will pay dividends for Maine families and our economy. One estimate suggests every state government dollar spent on public higher education in Maine produces $2.90 in increased tax revenues and reduced safety-net costs.[vi]
Student loan debt acts as a drag on the economy by reducing the ability of borrowers to fully participate in it. Large student loan burdens delay or prevent them from starting a business, buying a home, or starting a family.[vii] The debt has persistent impacts on the everyday finances of Mainers. A poll commissioned by MECEP in December 2018 found Mainers struggling to pay student loans in multiple ways:[viii]
- 60 percent of respondents said they’ve struggled to pay a student loan payment.
- 56 percent of respondents said that student loan debt is causing them to reduce the amount they save for retirement.
- 51 percent of respondents said that they had to delay a major purchase like a car.
- 39 percent had to skip a bill in order to pay their loans, including a utility bill, rent, or car payment.
- More than 40 percent of respondents know someone who moved to another state in order to take a job that will help them afford payments.
- One in three Maine student loan borrowers have been unable to buy necessities such as food and clothing in order to make their loan payments.
By ensuring that Mainers have the ability to attend community college without incurring debt, LD 860 would lower the cost barrier that keeps so many students from attending or finishing college, and it would reduce the overall student debt burden on future generations of students, so that they can more fully participate in our economy. That’s well worth the cost.
Notes
[i] US Department of Education, College Scorecard Data.
[ii] Federal Reserve Bank of New York, Quarterly Report on Household Credit and Debt, Q4 2018. Available at https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2018Q4.pdf
[iii] Jody Harris, “Policy Brief: Predatory actors worsen borrowers’ woes as education debt holds back Maine’s economy,” Maine Center for Economic Policy, Dec 10, 2018. Web. Available at https://www.mecep.org/policy-brief-predatory-actors-worsen-borrowers-woes-as-education-debt-holds-back-maines-economy/
[iv] MECEP analysis of “Trends in Student Aid,” The College Board. Web. Available at https://trends.collegeboard.org/student-aid/figures-tables/total-federal-and-nonfederal-loans-over-time. In the 1997-98 school year, college students borrowed $3.5 billion in private loans, equivalent to $5.4 billion after adjusting for inflation.
[v] US Census Bureau, American Community Survey, 2017 data. 19% of Mainers aged 25 and older had some college education but no degree.
[vi] Philip Trostsel, “The Fiscal Impacts of College Attainment,” Federal Reserve Bank of Boston, 2007. Web. Available at https://www.bostonfed.org/publications/new-england-public-policy-center-working-paper/2007/the-fiscal-impacts-of-college-attainment.aspx
[vii] Rajashri Chakrabarti, Nicole Gorton, and Wilbert van der Klaauw, “Diplomas to Doorsteps: Education, Student Debt, and Homeownership,” Federal Reserve Bank of New York, Apr 3, 2017. Web. Available at https://libertystreeteconomics.newyorkfed.org/2017/04/diplomas-to-doorsteps-education-student-debt-and-homeownership.html
[viii] “New poll: Mainers struggle to pay down student debt, say loan servicers are making matters worse,” Maine Center for Economic Policy, Nov 29, 2018. Web. Available at https://www.mecep.org/new-poll-mainers-struggle-to-pay-down-student-debt-say-loan-servicers-are-making-matters-worse/
