The Committee on Innovation, Development, Economic Advancement and Business heard several bills last week that would cost Maine millions to provide students with a debt-free postsecondary education. The proposals included plans to issue bonds for the payment of student debt, provide one-time funds to the Maine State Grant Program and cover student tuition for Maine residents. This article will focus primarily on LD 1445, sponsored by Representative Heidi Brooks, which would establish the Debt-free Educational Opportunities for Maine Residents program.
The program would be administered by the Finance Authority of Maine (FAME), an organization that was created in 1983 and currently provides higher education grants to eligible students in the state of Maine. LD 1445 would direct FAME to cover the tuition and all associated costs of attending school, which includes the cost of room and board, books, supplies and fees for students who want to attend a college or university in the state of Maine. Not only would this proposed program be costly, but it would likely be a colossal waste of public funds.
The eligibility requirements for the grant established in LD 1445 are as follows: Students must have a high school diploma, GED or equivalent, be accepted as an undergraduate at a Maine school, have applied for the grant and been a resident of the state for one year preceding their grant application. Thus, virtually all in-state students would be eligible to receive “debt-free education” under LD 1445.
That isn’t all — students would be eligible to receive the grant until they complete their program of study, and the language of the proposal does not hold students accountable to pay back the funds if they do not finish their programs. Therefore, an in-state student could attend the University of Maine for two semesters with taxpayer dollars and decide to quit going to school without repercussions. The cost to provide debt-free college to almost all in-state students would be astronomical, waste precious taxpayer resources and would likely have several unintended consequences.
If all eligible students in Maine take advantage of the grant, we estimate the cost to be more than $340 million. This figure was calculated by multiplying the average cost of tuition and the number of in-state students attending the University of Maine System. This estimate does not include the subsidization of books and supplies, which would create a larger burden on taxpayers. To put this into perspective, the entire state government appropriation to the Board of Trustees of the University of Maine System in the 2018-19 biennium was $423 million and FAME received just $32.3 million in the same budget cycle.
In addition, individuals that choose not to take advantage of the Debt-free Educational Opportunities for Maine Residents program would be responsible for paying a substantial portion of the cost. Only around 30 percent of Mainers have a bachelor’s degree or higher. As a point of reference, if the burden of this program were distributed equally, it would cost approximately $500 for every individual that is employed in the state of Maine. This begs the question, what would Mainers who do not go to college receive in return for such a large investment in post-secondary education?
A 2018 report from Educate Maine illustrated that only 56 percent of first-time, full-time college students complete their degree within six years of entering college. This is lower than the New England average, which is 63 percent. In 2015, the Maine Department of Labor released a report that found just 76 percent of graduates from Maine institutions of higher learning found jobs within the state and only 46 percent were employed the entire year after graduation. If LD 1445 is passed this session, Maine taxpayers would likely waste approximately 44 percent of the funds dedicated to first-time, full-time college students. Also, based on the data, only 26 percent of Maine first-time, full time college students will be employed the entire year after they graduate with their degree and earn greater than or equal to the minimum wage threshold for each quarter of the year.
Legislators and policy-makers seem to forget that going to a college or university is completely optional and the choice is solely left in the hands of students and parents. While guidance counselors, teachers, parents and society as a whole have perpetuated the idea that college is the only avenue to be successful, there are ways to do so without attaining a degree. High school graduates can enter the military, go straight into the workforce, learn a trade or become an entrepreneur, to name a few options. In other words, going to post-secondary school is a choice, not a right, and state government should not treat it as such.
In addition, only approximately one-third of college students in the United States believe they will graduate with the skills and knowledge necessary to be successful in the job market or the workplace. Further, only 53 percent believe their major will lead to a good job. If students are not confident in their ability to succeed after they graduate, taxpayers should be just as cautious to subsidize their education.
Instead of providing students with money for in-state tuition with almost no questions asked, lawmakers should be focused on lowering the price of tuition for students at Maine’s public colleges and universities. There is a plethora of research that suggests that the rising price of tuition is partly attributed to the nature of student loan borrowing in the United States. Colleges and universities can raise the price of tuition in the current climate without feeling market pressures because the federal government has been willing to cover the up-front cost through loans and grants. If the federal and state government did not intervene, colleges and universities would be required to compete with one another for students, thus they would be incentivised to offer competitive pricing. Colleges and universities would also learn to live within their means by reducing their budgets based on necessities, not desires.
We suggest lawmakers take a laissez faire approach to determining the price of higher education. Instead of fighting to subsidize students’ tuition, lawmakers should be advocating to reduce the amount of loans and grants federal and state governments issue to Mainers. This would accomplish two goals; it would require schools to reduce their tuition to make it more affordable for the average Mainer to attend college and incentive students to be more frugal with the money they are spending. In other words, students would be more responsible for how much they spend and which classes they take.
It is clear that LD 1445, while likely well-intentioned, would be burdensome for all taxpayers and would likely cause the price of tuition and other college costs to soar in Maine. After all, state schools would continue to be shielded from traditional market forces and could raise their prices without fear of losing students under LD 1445. Not only that, but some of these funds would be wasted on students who do not finish their degrees, or are unprepared to pursue a career after graduation. In sum, LD 1445 and the other student debt-relief initiatives would grow spending by exorbitant amounts while offering little benefit to students and taxpayers.