AUGUSTA, Maine — A proposal from President Joe Biden would wipe away a significant amount of college debt for millions of Americans, but how to reduce ballooning costs that led to it in the first place remains a political challenge in a debt-burdened Maine.
The president’s announcement that his administration plans to cancel up to $10,000 for borrowers making under $125,000 individually or up to $20,000 for Pell Grant recipients led to two types of reactions: supporters calling it a long-overdue answer to a major economic issue and critics panning it as being unfair to those who paid off their debt.
Maine and other states have been reckoning with this burden after decades of disinvestment in public universities across the country. While student debt has become a major topic of conversation in Augusta, remedies floated by lawmakers in recent years have been more geared toward the symptom of debt than the root cause of cost.
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The long-term financial trends in Maine are stark. Two-thirds of the University of Maine System’s budget was paid for by state funding in 1989, according to a 2021 report. Now, it accounts for 40 percent. Tuition made up just 22 percent of funding then, and it is now 50 percent of the budget.
Maine has one of highest debt burdens in the country, according to the Institute for College Access and Success. Biden’s proposal could affect up to 177,000 Mainers, according to the liberal Maine Center for Economic Policy.
Recent events may make the university system more reliant on tuition after a decade in which it was held flat seven times. Expecting the smallest incoming first-year student class in some time, the system used reserves to close a budget gap this year and expects $40 million in shortfalls through 2027.
Gov. Janet Mills’ spokesperson, Lindsay Crete, said Friday that the Democratic governor disagreed with Biden’s plan. The Democrat believes that other programs, including her recent expansion of a tax credit that rewards Maine graduates who stay and work in the state, are more reasonable, Crete said.
She did not offer other specific plans to decrease college costs on the front end or relieve debt, aside from saying Mills is interested in continuing a $20 million program offering free community college to Maine high school students graduating between 2020 and 2023. It helped grease a 12 percent bump in enrollment for two-year degrees this year.
Her November opponent, former Republican Gov. Paul LePage, was more strident in opposition to Biden’s plan, with strategist Brent Littlefield saying it discriminates against those who did not go to college. He offered a more concrete future proposal: low-interest loans to students and working with companies who employ graduates to pay debt.
“Paul believes education is the key to helping lift people out of poverty so they can find work and become happy and productive,” he said.
Appropriations and tuition made up an equal share of the Maine university system’s budget in 2008 as a recession hit the country. There has been increased investment in recent years. Since Mills took office, the system’s budget has increased by 12 percent.
But that has not been enough to keep up with costs from costs to energy upgrades needed to keep the system competitive, said Ryan Low, a former state budget commissioner who now oversees the university system’s budget. The system estimates it is about $1.3 billion behind on infrastructure needs.
“If your revenue base stays flat … you’re constantly losing ground because wages, health insurance, and those types of costs are going up,” he said.
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There could be bipartisan interest in reducing costs upfront. Assistant Senate Minority Leader Matt Pouliot, R-Augusta, who championed the revamped tax credit bill, said targeted investments in the system could help in the long run but should be coupled with tuition freezes. He is looking at introducing a low-interest loan bill like LePage floated next year.
“We need to make sure it’s going toward reducing tuition costs, not building another building,” he said.
Assistant Senate Majority Leader Mattie Daughtry, D-Brunswick, said both increasing investment in the university system and student affordability would go a long way securing the schools’ financial futures and ensuring students finish their degrees.
“That upfront investment is a lot more impactful,” she said.