Some of the first demands from the Occupy Wall Street protesters were for forgiving student loan debt. For many observers, it seemed to come from left field. Decrying the greed and impunity with which Wall Street banks helped create the recession was expected; but college loan debt?
The focus on college loans delineated the Occupy protesters from their more seasoned counterparts in the tea party movement. It’s a very real concern, one that ought also concern those who have long since paid off their school loans. It’s the subject of this week’s The Maine Debate. Join us here Tuesday morning to discuss the issues.
Imagine your son or daughter walking off the stage at college graduation debt-free, then celebrating by heading to a Lexus dealer and signing on to finance a 2012 four-door sedan. That’s exactly the debt load the average Maine college grad carries — $29,983, the second highest in the nation. If he or she were paying off that new Lexus, at 5.5 percent over five years, the monthly bill would be $573.
Twenty years ago, the average student loan debt was $10,000. Part of the problem is that less aid is available from the federal government. But the other explanation is that the cost of post-secondary education has risen faster than inflation, even faster than the price of houses and health care. Tuition this fall at the average public university is up 8.3 percent over last year.
Public colleges and universities, of course, are not paving their sidewalks with gold bricks; they are raising tuition, room and board and fees because states are cutting their subsidies. This is more fall-out from the worst recession in 75 years, and it further cripples the economy by hampering family budgets.
But there are even deeper implications of new graduates carrying so much student loan debt. Returning to the hypothetical graduate who bought the new Lexus and now must make those steep monthly payments — how likely would it be for he or she to take a low-paying job, even if it promised upward mobility in the grad’s chosen field? How likely is it that the grad would launch a small business? Or incur more debt by pursuing post-graduate study or an unpaid internship?
Liberals and conservatives agree that having more educated young adults — in academics or in job-specific skills — is necessary for Maine’s economy to grow. As a state, we’ve invested in tax credits (the Opportunity Maine program) to ease the burden of some of that student loan debt as long as the grad stays and works here. But more can be done.
On the federal level, President Barack Obama has proposed a “pay-as-you-earn” plan at easing the $1 trillion in student loan debt now collectively carried by 36 million Americans. In Congress, Maine’s Rep. Mike Michaud has introduced a bill called the Student Loan Default Prevention Act, which would allow states with agencies such as Maine’s the Finance Authority of Maine to help grads manage their loan debt.
In announcing his proposal, Michaud cited the recently released report by the nonprofit Institute for College Access & Success, whose recommendations include borrowing and managing the debt wisely.
Join us Tuesday.