Is a ‘New Deal’ for college loan debt needed?

Posted Dec. 12, 2011, at 6:02 p.m.

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.

Similar articles:

Anonymous

   This is a problem caused by elitism and status symbols. Students think they are all entitled to a 200k education and don’t take into consideration that financing that much money is a stupid idea.
   A degree for underwater basket weaving from Kaplan university is no different than the same degree from bates, its just a matter of bragging rights.
  The loan amounts these kids are able to take out are ridiculous. A person of the same age and financial situation as your typical college student would be laughed at if they tried to finance a 200k house, and thats even a secured debt. Ultimately though, these are adults by law they signed the note and promised to pay and the terms were clearly stated on the loan contract. They need to pay for their mistakes themselves just as any of us would for not paying our mortgages.
   Another point I would like to make is that most of these kids have about 40k in loans. That should not take 30 years to pay off even if they are working at McDonalds. I frequently bought cars for that amount when I was younger and the payment came to around 600 bucks a month for 72 months, hardly a lifetime.
Anonymous

Give me a break…seriously “elitism and status symbol”….sigh. How about just getting a good education…Yes Kaplan is fine but sometimes people want more and should have to pay back the loan if they take one- no question about that. Where I think we could do a better job is helping some of those “kids” who get a job right out of college, never miss a payment and pay off their student loans by living hand to mouth while they pay it down. Stop helping the low life dead beats who default on their loans and whine about not being able to pay them back – there are jobs out there but our “share the wealth”, I want everything handed to me friends don’t want to take responsibility for their debt and work at a job that is beneath them. The whole share the wealth crap is getting old – so basically, I can work my butt off and then give it to others while they sit home, collect 3 years of unemployment, breed kids they can’t feed and whine cause I have more than they do…..guess I am an elitist! How about we all work and pay our own debt, our own way, live within our means and “don’t breed em if you can’t feed em”….Nuff said!
Anonymous

I think you misunderstood what I’m saying, I agree with you 100 percent, I’m saying that students are being elitist by demanding attendance in high priced schools instead of something within their means like an online college. I in no way think they should be subsidized by us working people.
Anonymous

I wish I had a 5.5% interest in one of my student loans, it’d be better than the 6.3 I’ve got on it.
Anonymous

There is research indicating that its the student not the college that is the ultimate determinant of earning power after graduation. In other words you don’t need to graduate from a prestigious school to be successful. Unfortunately kids aren’t being provided with basic economic skills in high school. Most have no clue as to the implications of taking on the debt they do. Instead of Government bailing out students, we should be addressing the root cause their mismanaging credit and provide them with the skills to make informed decisions.
Anonymous

Exactly. Unfortunately they don’t even know how credit works and most end up destroying it right after they graduate with best buy credit cards and loans for new toyotas. The standard 100 dollar a month cell phone bill doesn’t help much either.
Anonymous

Oh, weeping celestial choirs! I’m calling both these silly ideas to DEFCON 3 status - two stages from a total collapse of rational thought in this state and nation. These proposals even top the embed Ebonics in classrooms to fix our schools craze and a return to the discussions of ”Midnight Basketball” to cure teen crime of the 90′s. It’s time to drag congress to Marcy Park in a rolled-up rug.
Anonymous

Those of us who graduated from high school in the last century weren’t so easily handed money to go to college. You had to have a good chunk of the money to get in. You also had to be pretty much a straight A student. For this I am grateful, otherwise I may still be in debt.
It was simple then to me and it is still simple, join the military in some form. Earn your loan payoff by serving your country. Please don’t start with the class warfare by bringing up the rich kid scenarios.
Anonymous

Before you know it, we will have the occupy patriots
demanding that every person must have a free home.
Anonymous

The hacks at Maine state housing are building them…for $250K each. Free housing for everyone.
Anonymous

The Tony Soprano approach to dealing with congress? I love it!
Anonymous

I payed for my daughter’s education at UMO. She owned her degree the day they gave it to her. My ex and I worked our butts off to do it. She was excepted to much more expensive schools and she was coaxed in that direction by her high school guidance counselor. I asked the counselor if she was willing to pay the tuition to the far more expensive school? She suggested that she apply for loans. We payed our own way in my house and she went to UMO. She has friends that followed the counselors advice and are now working minimum wage jobs to try and pay back their enormous student loans. She thanks us on a daily basis for helping her to avoid that trap. My daughter was working a part time job while attending UMO and felt that she needed a credit card, like all her friends. The credit card people set up shop in the quad and encouraged everyone to apply. My daughter had the good sense to call and ask me my opinion before signing up. I told her to get an American Express card and explained the difference between a charge card and a credit card. She went with the AM EX card and does not have any credit card debt to this day. She said it was the best advice about credit that I ever gave her. All her friends have large balances on their Visa and Master cards, which they are trying to make minimum payments on, along with huge student loans. It is really all about smart choices and living within your means. A lot of these kids have parents that are no better with money than they are. If you think I am going to get on board with paying off some other kid’s student loans, you are smoking some pretty good stuff. Give your kids financial advice, not loan applications.
Anonymous

There are 4 unemployed people for every available job. That’s a horrifying fact. The unemployed, including recent grads, are not lazy. They’re desperate.
Anonymous

Several years ago I had to go to a naval hospital to get an EKG. The seaman came in and gave me the test. I asked him what it showed. He answered he didn’t know he just knows how to give them not read them. There is the difference between training and education. When I was at the university the U.S. was number one in college graduates. Now the U.S. is number 14. Then the problem was getting foreign students to return home to give the benefit of their education to their own people. Now they are talking about handing out a green card to every one from abroad who completes their university education here. The object of training is to know how to do something. The object of education is to know why and what are the ramifications of what you have done. If it is in the national interest for the U.S. to know the why and what the ramifications are for doing something then a university education is vital. If it is vital than the U.S. should be willing to pay for it in part or in whole. Look around you!!
Anonymous

We are paying the majority of our son’s tuition too. My husband and I have scrimped and saved to do this for our son. When he graduates he will have a small student loan that he will be able to pay off easily within a year or two. We made sure our son was well educated on the dangers of credit cards prior to heading off to school. He has a Visa that has a $500 limit and when he uses it he pays it off in full each month. He has worked every summer and saved his money to help with his extra expenses (books, gas etc). Like you I look at those that are complaining and shake my head. We did it the smart way…why should we have to pay for those that didn’t?
Anonymous

As long as there are hundreds of thousands of jobs on farms and in housekeeping that attract illegal aliens from thousands of miles away their home into the U.S. – I will consider the unemployed lazy. There are paying jobs out there – they just refuse to do certain jobs they think are below themselves including McDonald’s and Walmart, or they refuse to relocate and seek out work (there are thousands of jobs available in oil drilling in the Dakotas right now). They do this also because the government is constantly giving extended handouts in the form of unemployment, welfare, and various other assistance that incentivizes these people to not seek out anything that will cause them to lose such benefits that are free.
Anonymous

Numerous indicators reveal that higher education both public and private have porked out with the flood of student loan money….administrative costs have skyrocketed over the past decade, administrators have proliferated, curriculum offerings unrelated to any kind of occupation have sprung up like weeds, and greedy ambitious students assisted by the financial aid industry have become permanent residents, never graduating but changing majors with every new loan and piling up dept they can never repay.

In a sense, higher education is where the mortgage industry was a decade ago–booming on credit and other financial gimmicks.

Faculty work loads have dropped and ‘perks’ escalated; with some private schools granting paid sabbaticals every three years. Check out the salaries and benefits for top administrators and Wall Street bonuses seem modest.

When I can pick up a copy of READER’s DIGEST in a barber shop and read about the ten top reasons why a college education is so expensive; you know that the abuse has become ingrained in the public consciousness.

So how do you reform this system; specifically the sprawling byzantine University of Maine with it’s many campuses and expensive assets….why does USM need the ‘STONE HOUSE’ in S. Freeport when this ocean side estate is used sporadically over a year? The hugh Darling center complex in S. Bristol is nearly empty, yet it maintained for a handful of researchers do what that will benefit the economy of Maine?

Year after year the Legislature pays the bills and defers decisions to the Board of Trustees; who in turn defer decisions to the administrators and faculty unions. No one dares suggest there is overlap and wasted resources; and the only option is expansion. Then there is the big name sports played by a university fielding teams on every level and using substantial amounts of tax money to keep this beast alive–just wait until the law suits concerning head injuries in hockey, football and soccer start getting filed—see Sunday’s NYTIMES conclusions on brain injury and violent sports like hockey.
http://twitter.com/ccastong CJ Castonguay

As a recent graduate with an 80,000 loan to pay off, I expect to pay every penny of it. It is no different than a home mortgage or a car loan, why not forgive those people too?! IF anything I wouldn’t mind being able to pay less now as I am still trying to enter grad school and become a dentist and return to Maine and practice, and I need as much money saved up as possible before I get accepted…but to have all of my government loans forgiven in 20 years seems a bit like he is trying to buy my vote for the upcoming election.
Anonymous

Talk to an employer, and the jobs are really ‘remedial’ employment for people who lack skills and experience; but are filled with ‘self-esteem’ and faux transcripts.

Gotta love THOMAS COLLEGE’s ‘in-your-face UMS’, graduate-with-a-job promise.

Cell phone and wireless appliances are as addicting as any drug; yet another bill that takes precedence over repaying tuition loans.
Anonymous

The world was built by a mobile labor force; as long as students are rooted in Orono, they will never find a job; and as long as Orono is a 3rd rate university, employers won’t recruit there. About a decade ago, I was on campus at a time a recruiting fair was being held….and there was a notice about how many firms from New England are no longer making the trek to Orono.

Compare this with Colby and Bowdoin, with crowds of recruiters.

I wonder whether an emphasis on finding jobs in Asia or S. America might be a worthy focus, instead of having four grads. compete for 1 job? Si?

Go where the ‘clams’ are, instead of praying for more in your flats.

p.s. I’m one who worked all through undergraduate, law and grad. school; cherry picking the ‘best paid’ and most interesting jobs. No loans, just a few scholarships. Sacrificed high grades; but learned a lot.
http://www.facebook.com/tom.harvell Tom Harvell

Stone House was donated to the school and closed several years ago due to the cost.
Anonymous

Exactly! Lol. Congratulations to you and your husband for good parenting. A skill that is becoming frightfully rare these days.
Anonymous

There are four people looking for work, for every ONE job. The fact that you can identify some open jobs does not change that.

It is not unemployment insurance and other safety net problems that causes unemployment.

If a person’s house was on fire and the fire department sprayed water on it, you would have us believe that the water caused the fire.
Anonymous

You were wise to take this approach.

But don’t forget that some of the people now graduating started college while the economy was in good shape. They dared to have high hopes for their future. They had reason to believe (back then) that they would be able to find an excellent job and pay back their college fees. Then the economy tanked, around 2008. They got caught in Depression II, just as the rest of us have.
Anonymous

Your comment has some merit, but I have never believed that swapping debt for a degree is a good idea. Good economy or bad. I would have loved to go to an Iyy league college, but when I graduted from high school in 1978 my mother’s wallet and mine said U.S.M.C.! Lol. Talk about an education! lol.
Anonymous

“So how do you reform this system?”

Easy…end the Federal Reserve!
Anonymous

There are plenty of positions for gender studies grads i hear.
Anonymous

Still used for retreats. USM still owns it…so the sign out front says. Grand estate; nice luxury for Bowdoin, but a USM losing 8,000 students and facing heavy competition from the community college system doesn’t need any expensive property to care for.
Anonymous

Even just 10 years ago, the pell grant covered the majority of college costs for those with merit who do not come from wealth. Now? It covers just a small fraction. The incentive to go to school and further educate one’s self beyond high school has been fractioned as well. We tell kids if they work hard and do well in school, it’ll pay off — but is that true anymore? Just look at how many young adults graduate from college and end up underemployed in a job they could have gotten in high school. Over half of them end up in that kind of a circumstance. Couple that with the rising cost of education, I can see why they’re protesting over this.
Anonymous

It’s not that there are just some who don’t want to pay. It’s that a majority are struggling to pay it off.
http://twitter.com/ccastong CJ Castonguay

Well yeah…that’s why I work 2 jobs, the real world sucks sadly is what I’ve learned and I have to take responsibility for my actions.
Anonymous

Good for you, I’m sure many are in the same boat. But know that it’s not your mistakes you’re paying for.
http://pulse.yahoo.com/_NXPTPFL746OV2VGR5WBOEUF6W4 Roger

Yes gimme gimme gimme. Everybody wants to get without working for it. Whats gonna happen when there are more taking then earning. O wait we have that already. Welfare is rampant. Time for some self responsibility you want something earn it or go without! Either way leave the money of those of us who pay our own way in life ALONE and get a job!!!
Anonymous

Yes, talk, talk, talk. Everybody runs their mouth without knowing what they’re talking about. What jobs should these kids get? They don’t exist anymore!

Opinion

Previous story:

Next story:

THE MAINE DEBATE

Is a ‘New Deal’ for college loan debt needed?

Similar articles:

Marketplace News

Marketplace

Marketplace Coupons

Bangor Daily News

About Us

Subscribe

Advertising

On Facebook

On Twitter