Maine could eliminate tuition costs for students with ‘pay it forward’ model from Oregon

Posted Jan. 29, 2014, at 4:12 p.m.
Rep. Matthea Daughtry
Rep. Matthea Daughtry Buy Photo
Sen. Roger Katz
Sen. Roger Katz Buy Photo
Senate President Justin Alfond
Senate President Justin Alfond Buy Photo

AUGUSTA, Maine — College is expensive, and many Mainers, like students around the country, have to borrow a lot of money to earn a degree.

But imagine attending a two- or four-year college or university in Maine without having to pay any tuition costs up-front. Instead, you sign a deal to pay a fixed rate of your income for a predetermined amount of time after you graduate.

If you become a doctor, you’ll pay more than a teacher, but both pay the same share. If you don’t get a job, you don’t owe anything until you do. Then, the money you and your classmates pay into the system covers the cost of the next generation of students.

Lawmakers in Augusta are considering two bills that would have the state explore the possibility of setting up that type of system. It’s already been adopted in Oregon, which could launch the program as early as next year. Similar plans are under legislative consideration in 16 other states.

It’s all meant to address the rising costs of education and ballooning student debt that many have said will be a drag on economic recovery as college grads devote even greater portions of their income to student debt repayment than ever before.

Nationally, the cost of attending college spiked 42 percent from 2000 to 2011, according to the U.S. Department of Education. In Maine, the average college graduate leaves school with nearly $30,000 of student debt. Tuition has grown faster than the rate of inflation or median household incomes, while state aid to students and appropriations to public universities have remained flat or decreased.

That debt load is “stifling” the generation of Mainers who carry it, said Rep. Matthea Daughtry, D-Brunswick, a leader in the House Youth Caucus and member of the Legislature’s Education Committee.

All that debt means “many young adults have to put the next steps of life on hold,” Daughtry said Wednesday. “Many move back in with their parents because they can’t afford to live anywhere else. I did. Others cannot afford to purchase a car, get married, purchase a house or save for a family. This has a larger impact on our economy.”

On Wednesday, the Education Committee held a joint public hearing on two bills designed to make a college education in Maine more accessible.

One bill, LD 1702, sponsored by Assistant Senate Minority Leader Roger Katz, R-Augusta, directs the University of Maine and Maine Community College systems to study the establishment of Oregon’s “Pay it forward, Pay it back” program.

The other bill, LD 1703, sponsored by Senate President Justin Alfond, D-Portland, is a concept bill aimed at affordability and degree completion. It’s based on nine initiatives outlined by Alfond, including adoption of the Oregon model and a list of other ideas such as tuition guarantees, state-backed loans and financial aid incentives requiring students to stay in Maine for a time after they graduate.

“Whether the issue is income inequality, job creation, strengthening the economy, [or] workforce development, the nexus for each of these is degree affordability and attainment,” he said. “While it may be a heavy lift, I’m confident that we have the will and determination, and the tools and guidance, to solve this issue together.”

Representatives from the Maine State Chamber of Commerce, the University of Maine and community college systems, as well as a lobbyist for a group representing Maine’s private post-secondary schools, all voiced their support for both bills.

“Earning a post-secondary degree or credential is a requirement of today’s economy,” said Susan Hunter, vice chancellor for academic affairs at the University of Maine System.

She said rising education costs and heavy debt loads were “squeezing” the middle class. John Fitzsimmons, president of the community college systems, said some students don’t even apply for college because of “sticker shock.”

If Maine does decide to go with an Oregon-style model, it would require a huge up-front cost — enough to pay colleges and universities to cover the costs of the incoming freshman class who would sign up under the program. And students may still have to take out some loans to cover the cost of room and board.

Katz said the state should not consider paying for the start-up costs out of the general fund, but said revenue bonds or even a private consortium of banks could capitalize the project. And there are still lots of details that would have to be worked out, such as exactly what percentage of their income graduates would be asked to pay back into the system.

But the state should not be daunted by the scope of change being considered, Katz said.

“The status quo of unaffordability is just not acceptable,” Katz said. “Let’s take a look at this, let’s kick the tires a little.”

Eliot Cutler, an independent candidate for governor in 2014, told the committee the growing price tag on education is as troubling as skyrocketing health care costs, which draw far more political attention in Augusta and in Washington, D.C. That makes the number of dropouts all the more tragic, Cutler said. A Pew Research Center survey showed that half the 18-to-34-year-olds who quit school did so because they couldn’t afford it.

“This trend is tragic and represents not only a cost to those men and women, but a tragically sunk cost for the taxpayers of the state of Maine who are supporting whatever educational experience those kids had before they dropped out,” he said.

The Education Committee will host panels to discuss Maine’s higher education landscape before holding a work session on Alfond’s and Katz’s bills. No date has yet been set.

Follow Mario Moretto on Twitter at @riocarmine.

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