State Rep. Paul Mark, D-Peru, has chaired a subcommittee looking into student loans.
PITTSFIELD, Mass. — It used to be that going to college was a surefire way to get ahead economically.
High school students across the state get those acceptance letters in the mail, celebrate, fill out all of the loan paperwork and then head off to college to make a future.
But after the degrees are passed out, the first loan payment comes due. The new graduates find that for years to come, a significant amount of the salary they worked so hard to earn goes right to the creditors.
"People assume that the student loans will be worth it. But that's not necessarily the case," said state Rep. Paul Mark, D-Peru, who headed a joint subcommittee looking into student loans. "It is more important now, more than ever, that you know what you are getting into and plan financially."
What has happened over the last decade or so is that the federal and state governments have scaled back funding for college education. For example, in 1988, the state's MassGrant program funded 80 percent of tuition and fees. Now, it covers 9 percent. Massachusetts ranks 46th in the nation for need-based financial aid programs.
Meanwhile, aid to the state university system has waned, forcing administrators to push more of the cost burden on the students. In the last 10 years, the University of Massachusetts rose fees 110 percent; the rest of the state schools are up 107 percent and community colleges, 71 percent.
More and more, the cost of a college education isn't worth what a graduate is getting in return. UMass students are averaging $26,800 in debt; other universities are averaging $22,400. The average debt load of a community college graduate has gone up by $1,400 in the last three years.
Mark's subcommittee set its sights on finding ways to curb the trend and last week filed a report on its nearly yearlong research that Mark hopes is just the start of a serious statewide push to address the issues.
"The ultimate hope is that this report will spark other ideas," Mark said Monday.
The subcommittee delivered nine recommendations — all of which can be reviewed in the full report below — that span financial literacy to increased state aid to loan forgiveness programs. Mark said expanding loan forgiveness programs are particularly important for the Berkshires.
Those programs would be through partnerships rewarding graduates for working in underserved areas. A recent graduate might be interested in moving and working in a rural area, but often the salary isn't enough to support him or her and still make headway on the student debt.
There are already bills in the Legislature the subcommittee is urging be passed that would allocate $1.2 million for a pilot program for licensed certified social employers in areas of high needs. The report calls for even more forgiveness programs to be explored.
"Loan forgiveness programs will encourage students to go into fields that they are interested in pursuing but may be inclined to avoid due to the high cost of educational requirements and the promise of moderate income levels after graduation," the report reads. "Loan forgiveness can also serve to attract graduates and experienced professionals to areas of the commonwealth that are experiencing shortages in important occupational fields."
Meanwhile, the subcommittee wants to find ways to support people for saving for college at a young age. Mark said the state should do more with tax incentives or provide a match for families saving for college. There are state programs — like the UPlan — which Mark says can be utilized much better.
"If there is a way to do something and someone have 20 percent of the costs covered ahead of time, that would be great benefit," Mark said.
Coupled with more financial literacy, letting families know exactly what the cost of college will do to their future budgets, students can be more prepared.
The committee also recommends more funding to the individual state universities and community colleges but also wants to couple that with more oversight.
The subcommittee suggested exploring ways to couple state grants with loan default rates and graduation rates — forcing schools to keep costs down. Other ideas included restricting aid to schools with a high percentage of students borrowing unless the school keeps a certain graduation rate up and default rates down.
"We're definitely not talking about writing a blank check," Mark said.
The committee is also looking at restricting state schools from increasing their costs above normal inflation to receive equal funding. If a school wanted to raise above that, it would need a special waiver through the Department of Education.
Another recommendation from the subcommittee is to continue the 50/50 split with state universities. That agreement, reached in last year's budget, provided an increase in funding required by schools to freeze fees.
The state has limitations on what they can regulate with private institutions. Mark says implementing stronger programs to make the state's high schoolers more aware of what they are about to take on and having state schools control the costs would in turn put pressure on private institutions to do the same.
Meanwhile, more for-profit schools are popping up, which the subcommittee feels need further regulations. According to a 2009 report, those schools are reeling in state funds through scholarship and other programs but using 41 percent of those funds for marketing. Only 17 percent of the federal and state funds going to those schools translate to being used for instruction.
"When you hear numbers like that, something is wrong," Mark said.
The subcommittee endorsed the report last week and in May will present it to the Joint Committee on Higher Education. From that report, Mark has already sponsored two amendments in the state budget — one to boost funding for community colleges to form partnerships with the private sector from $13 million to $20 million and another to raise funding for the MassGrant program by $5 million.
"To me this is the beginning of the conversation, not the end," Mark said. "Hopefully, our recommendations spark some action."
Massachusetts Joint Subcommittee on Student Debt: Student Loan Final Report