Susan Feiner, University of Southern Maine and Flynn Ross, University of Southern Maine
Originally published in the Bangor Daily News on September 28, 2016
Paying for college is not simply an individual problem. Families, communities, counties and states suffer from the public’s declining commitment to higher education. In Maine, as in most states, inflation-adjusted public higher education spending is down 13 percent since the recession. In contrast, seven states have increased such spending since 2008.
Many of us see the fallout daily: College graduates move back home, they delay buying homes and cars, and they even delay marriage. Saddled with student loan debt, grads cannot afford to start the businesses Maine needs because they’ve maxed out their borrowing capacity. It’s clear a generation putting their lives on hold stifles community growth and development.
With declining public support, students and their families have to pick up a larger share of the costs. According to the 2016 State Report Card from the organization Young Invincibles, Maine families cover 57 percent of the costs of attending public post-secondary institutions, which is considerably higher than the national average, placing Maine in the unenviable position of second runner-up for the least affordable public colleges. Only 4 percent of Maine’s state budget goes to supporting higher education, placing Maine fifth lowest in the nation for percent of state budget spent on higher education. And Maine’s financial aid per student is abysmally low, too: a meager $242 per student on average.
In Maine, only 61 percent of high school graduates go on to college, and their college graduation rate is 56 percent. One reason college attendance in Maine is so low is affordability: 41 states make college more affordable than Maine. And finally, Maine is a net exporter of college students — more students leave to attend college than enter.
The consequences for Maine students, families and our economy are severe. Thanks to the Mapping Student Debt project, we can look at student loan delinquencies and average loan balances by ZIP code. Delinquencies are worse in Maine than in the rest of New England. Even though average student loan balances are lower here, far more Maine ZIP codes have very or extremely high delinquency levels, which are closely related to lower median incomes.
Because student loans lack the protections of all other types of personal loans and because servicing these loans is outsourced to predatory outfits whose tactics would make a loan shark blush, the amounts owed on these loans are frequently double, triple or even quadruple the amount borrowed. Perhaps as much as half of the $1.3 trillion in student loan debt comprises penalties, late fees, servicing charges and fines. (We have no exact amount on this because the U.S. Department of Education refuses to open its books.) Servicers have strong incentives to add as many of these charges as they can. As penalties and fees mount, the balances on which interest is charged explode.
Even after multiple rounds of reform, student lending remains a hotbed of financial predation. The worst abuses occur on the collection and servicing side. Any casual perusal of the near infinite news stories on the topic reveal a long list of abuses.
Borrowers, taxpayers and society paid more than $1 billion in commissions to student loan servicers in 2014. That amount is projected to rise to more than $2 billion this year.
The faculty and staff of Maine’s community colleges and universities work incredibly hard on behalf of Maine students, doing wonderful things with meager resources. Imagine what we would achieve if we delivered the education Maine residents deserve.
If we want to boost our educational profile as a state, because of increased earnings and because more education is just plain better, then we have to push our policymakers — University of Maine System and Maine Community College System trustees — to do a far better job of higher education financing.
Susan Feiner, Ph.D., is professor of economics and Women and Gender Studies at the University of Southern Maine. She also is the president of the USM chapter of Associated Faculties of the Universities of Maine. Flynn Ross, Ed.D., is associate professor of teacher education and coordinator of the Extended Teacher Education Program at the USM. She is co-leader of the Maine chapter of the national Scholars Strategy Network, which brings together scholars across the country to address public challenges and their policy implications.