FOR IMMEDIATE RELEASE:
December 10, 2018
Mario Moretto, Communications Director
AUGUSTA, Maine — College degrees and other post-secondary certificates are an accelerant for individual incomes and our economy. But growing education debt, exacerbated by predatory loan servicing companies and for-profit colleges, is preventing families and the state from reaping the full benefits of higher education.
A new policy brief by the Maine Center for Economic Policy examines the effect of education debt on Mainers and the economy. The brief sheds light on the extent of the hardship Mainers face as a result of education debt, and the ways that debt is holding back Maine’s economy.
As policymakers prepare for the next legislative session, solutions to mitigate the damaging effect of education debt on Maine’s economy and to increase accountability for loan servicers and for-profit colleges should be a priority.
“As a state, we can enact policies that unshackle Mainers with student debt so they and our economy can reap the rewards of their education,” said Jody Harris, MECEP’s associate director and the brief’s author. “Until we do, we’ll continue to see borrowers and our economy hamstrung. Mainers with education debt are finding themselves unable to get ahead as they delay home ownership, put off retirement savings and, in some cases, forego necessities such as medical care, food or clothing because of their debt.”
Maine’s education loan borrowers owe nearly $6 billion in federal student loan debt. Harris’ analysis shows that the debt and interest carried by student borrowers would support 6,000 jobs and generate $726 million in spending at local businesses if it were circulating through Maine’s economy instead of going to federal lenders and loan servicers.
Harris’ research also shows that misleading and predatory practices by for-profit colleges and student loan servicing companies are making it harder for Mainers to pay down their education debt. Students at for-profit colleges fare worse than other students after leaving school, while problems with loan servicing companies are linked to greater economic hardship for borrowers.
Other key findings include:
- One in five Mainers owe money for their college education, including 20,000 Mainers over 60 years old. Those seniors, who make up the fastest-growing population of borrowers, carry a half-billion dollars in education debt.
- Loan default rates in Maine doubled from 2004 to 2018, with 10 percent of borrowers now in default.
- The effects of debt follow borrowers for decades. Nationally, half of education borrowers are still paying off their loans 20 years after they left college.
- While large debt holders command the most public attention, borrowers with smaller total debt loads are most likely to default.