A look at Maine student loan debt

By Michael Brown | Jun 20, 2019

When it comes to student loan debt over the last decade, Maine is in the middle of the pack. Let’s look at how the state can improve its position.

Over the last decade, a lot has changed regarding student debt, but unfortunately, for many graduates, that change has been for the worse. Since 2009, the national student loan debt has more than doubled, coming in at a shocking $1.52 trillion in 2019.

For many grads, the very debt meant to propel them into a successful career now acts as a roadblock. But what about for Maine residents? Have their debt obligations increased alongside that of the nation?

How has Maine managed student loan debt over the last 10 years?

According to a recent report by LendEDU [see here] that analyzed student loan debt figures over the course of 10 years at nearly 1,000 institutions, the average debt per borrower figure for Maine students has increased by 49.94%, which ranks Maine at 34. However, the number of grads leaving school with debt has fallen slightly, with 5.74% fewer students graduating with debt from 2007 to 2017, ranking Maine 13th nationwide.

Of course, as many student borrowers know, the total debt you accrue often comes down to the school you attend and the major you choose. In that respect, grads of Thomas College benefited in a drop from $38,734 to $31,142 when it came the student-debt-per-borrower figure, a nearly 20% decrease that was the 15th-highest decrease in the nation.

Who fared the worst? Students from Husson (712th), the University of Maine at Machias (715th), and Colby College (748th) experienced increases of 72.40%, 72.81%, and 80.76%, respectively. But it’s the University of Maine at Presque Isle (841st) and the University of Maine at Fort Kent (864th) that really suffered the biggest increases for that figure.

UMPI borrowers saw debt rise from $11,181 to $23,574 — a 110.84% increase — while UMFK students saw debt balloon by a whopping 129.85% from $10,482 to $24,096.

What Maine has done as a state to reduce student debt

Though student debt in the Pine Tree State has been growing, the state has taken some initiatives to keep it in check and hopefully drive it back down below national averages.

Through the Educational Opportunity Tax Credit program, Maine hopes not only to decrease the student loan debt of residents, but also to encourage a younger populace to live and work in the state.

The program benefits vary based on a number of factors, including when you graduated, the discipline in which you received a degree, and where you’re from. However, under the EOTC program, borrowers who choose to live and work in Maine can subtract their annual student loan payments from their income tax liability.

Is Maine Senate Bill 149 a good idea?

The EOTC can surely benefit residents and likely the Maine economy, but State Senate Majority Leader Nate Libby is looking to take an even bigger stand against crippling student debt. His solution? If you live and work in Maine for five years, you can say goodbye to your student debt — at least according to proposed Maine Senate Bill 149.

In theory, this bill can help stimulate the Maine economy by encouraging once debt-saddled residents to forge ahead with those dream purchases. The bill could also attract young talent, further bolstering Maine’s economic future.

Of course, there are risks associated with any full-on forgiveness program, namely cost. As of the third quarter of 2018, Maine borrowers owed a collective $6 billion in student debt. Debt forgiveness of that magnitude can obviously have adverse effects. Libby, however, hopes to mitigate the risk by limiting it to $250 million.

What else could Maine do to help students?

If forgiveness and tax credits aren’t the answer — or only part of the answer — what else can Maine do to bring student loan debt under control?

From an affordability standpoint, an increase in the number of state-funded grants and scholarships can help more students attend college without relying too much on student loans.

Perhaps one of the best options is to educate prospective students on the impact of student loans before they even apply. By explaining and demystifying the loan process — including how federal and private loans are different, how interest works, and what monthly payments will be in repayment — students can make more educated decisions about their academic and financial futures, particularly since the two are often inextricably tied together.

Michael Brown is a research analyst with LendEDU and author of the study referenced in his column.

 

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