Federal debt reduction opportunities explained

In my April 1 op-ed for the Bangor Daily News, I (and Prof. Rob Glover) mention three federal opportunities to reduce student debt impact that are explained on the Federal Student Aid’s website: Loan Consolidation, Income-Based Plan and Public Service Loan Forgiveness. Although the U.S. Dept. of Education does a thorough job explaining these options, I’m going to attempt to “dumb them down” even more while adding an example situation connected to Maine for this week’s blog assignment. These programs are vital to keeping youth exit rates down because Maine college grads aren’t thinking about quality of living after their senior years, they’re trying to find the most effective and quickest ways to pay their loans off.

Loan Consolidation

Loan Consolidation is a costless way to consolidate all of your loans into one, which (for those who have trouble keeping track of several things at one time) can make things easier. Essentially, all of your loans (except for Parent PLUS, private loans) are paid off by the US. Dept. of Education who then creates a new loan with an interest based on the average of the preexisting loans. Simplification is the major pro for this reduction opportunity. The costs per month are greatly reduced, however, this is due to an extension of the loan period which tags on more interest in the long run. If you’re a student that can’t afford to fork out a large payment each month now but expects things to get easier in the future, this can help you. The only thing to keep in mind is that you will be paying more overall.

Example: This is going to be basic and probably very wrong in terms of actual numbers, but let’s say you go to college and you graduate with a $10,000 Perkins loan with 2% interest and a $20,000 Stafford loan with 4% interest. By using Loan Consolidation, the U.S. Dept. of Education would pay off both loans and issue you one loan of $30,000 with 3% interest and your loan repayment period would be extended.

Income-Based Plan

This Income-Based Plan is true gift for those stuck in a situation after school that puts them in a position where loan repayment is virtually impossible. Based on the size of your family and income, the Income-Based Repayment (IBR) lowers payments within a 25-year period. Past the 25-year period, loans are, in most cases, forgiven although taxes can still be issued. The same cons associated with Loan Consolidation appear when looking at the Income-Based Plan: With a longer period, more interest can accumulate plus the same loans (Parent PLUS, private) are not recognized. This plan is great for those who really need it. The Dept. of Education is very strict with this plan (as the should be), frequently checking in for documentation on changes of income and family so that those who truly need the assistance aren’t forgotten.

Example: Again, forgive my bad examples, but let’s say you’re a recent college grad with your own family and a low income. You qualify for this program so you apply and you’re accepted. You pay less per month than what you usually would be paying, and this helps you out by freeing up more space in your budget for necessities to survive. After five years, you acquire a new job that pays better. However, you continue submitting documentation and remain enrolled in the program. This is okay according to the program rules, but your monthly payment increases due to your change in income. After 25 years, you haven’t paid off the full amount of loans but you’ve kept good documentation of income the entire way. You may qualify to get the last bit of your loans forgiven.

Public Service Loan Forgiveness

If you’re working full-time for a public service organization and you make 120 on-time payments, any extra loans could be forgiven in as little as 10 years through the Public Service Loan Forgiveness (PSLF) Program. Out of the three opportunities, this is perhaps the most enticing to students because of the short payment period and its possibility for forgiveness at the end. Also, its the only real incentive program out of the three. The other two give options to rework payment plans or capitalize on your poor economic situation, not the opportunity to work toward relief (while doing a good deed at the same time). Eligibility for the program is rigorous, and the program is very strict once you are accepted, but this is all because the pros related to a successful completion of the program could potentially save you thousands. Here’s perhaps the worst part of this program: Only William D. Ford Federal Direct Loans (Direct Loans) are accepted. That means Federal Family Education Loans (FFEL), Perkins and all the other ones can’t be used. Also, the company you work for has to be a federal, state or local government agency, entity or organization or a not-for-profit Section 501(c)(3), which can include a private employer who does not meet Section 501(c)(3) standard but can provide certain proof of public service standards.

Example: You have $10,000 in Direct Loans. You qualify for the PSLF Program so you apply and you’re accepted because you work for the government. After 10 years of working for the government, working a full-time (over 30 hours a week in most cases) and submitting 120 payments on-time, the rest of your loans are forgiven.

Overall, all three need some work to encompass more students and better ease the student debt problem this country currently has, but it’s at least a start. For the state of Maine, many college grads could take advantage of these programs, but there needs to be an increase in publicity so awareness of options is amplified.

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Op-ed: What’s in it for a recent college grad to stay in Maine?

Last week, Prof. Glover and I collaborated on an op-ed piece for the Bangor Daily News. The article will be printed in tomorrow’s issue and appearing online as soon as today. I will update this with a link to the story when it’s posted, but here’s one of the final drafts:

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What’s in it for a recent college grad to stay in Maine? |

What’s in it for me?

That’s what many soon-to-be Maine college grads are asking in reply to the state’s current plea to stay and work. With too many retiring baby boomers and few millennials to take their place, treacherous seas may be ahead for a state that was once able to comfortably offer jobs to most of its population in an economy shaped by natural resources.

Maine desperately needs to restrain the departure of its college-aged population. Right now, the state has Opportunity Maine, an incentive program that reimburses Maine grads who continue to live and work here, but is that enough?

In a 2006 paper, University of Southern Maine professor Charles Colgan said that tourism “define[s] the Maine economy.” Eight years later, it continues to add revenue. 

Out-of-staters can’t wait to visit Vacationland. But isn’t this a paradox? How are we luring in those who know little about Maine while allowing those educated for at least four years, and in some cases raised in Maine, to vanish after receiving a degree?

If you were to ask any of us 20-somethings why we are choosing to leave the state, we would likely say “there are more options” or “I want to see something different.” However, all of our responses would be followed up with “but I’d love to come back,” and, “it’s a great place to raise a family.”

We expect to come back to the beautiful Pine Tree State to raise children, coach high school teams and maybe take a crack at municipal government. But the age at which we are stepping away is the most crucial for population sustainability and the economic health of the state. If this age gap, combined with a decreasing population, continues to widen, we will be disappointed to find an unfamiliar state when, or if, we choose to return.

Career options are becoming narrower as our job creation rates drop — Maine was one of three states seeing negative growth in 2012-2013 — and, so far, a solution has yet to be found. 

As one of five states without a city exceeding 100,000 in population, Maine lacks a central hub for booming business and thriving entertainment. Obviously, a city of that type would change Maine’s unique, rugged, “off-the-grid” character. But such changes may prove essential if we are to avoid dips in population rates that present monumental challenges for Maine’s future. 

While many of the proposals to address demographics in Maine have involved the creation of “zones” to push businesses to relocate or expand, not enough has been done to incentivize younger individuals to stay in Maine (or relocate from elsewhere). 

These young people are unlikely to be buying homes, at least not yet. Getting them to stay in Maine will mean subsidizing those who are providing quality, affordable housing for recent graduates. This could operate in the same way that we currently offer incentives or tax abatements as a means to stimulate job creation in Maine. And such incentives should be made conditional upon passing these incentives on to their tenants and residents in lower housing costs. These neighborhoods would serve as hubs for interaction with a distinctive, innovative atmosphere made up of fresh talent or rookie entrepreneurs.

We also have to confront the reality that most recent graduates are starting their lives under the burden of student debt, which might push them to seek higher wages outside of Maine. Sustaining and enhancing Opportunity Maine with a more robust incentive could be the Legislature’s first mode of action to attempt to address this. 

However, this could be supplemented with programs (offered in coordination with colleges and universities) educating recent graduates about federal opportunities to reduce debt’s impact such as loan consolidation, income-based repayment, or public service loan forgiveness. If students are aware of these options, perhaps staying in Maine might seem like more of a reality. 

With hard economic times continuing for the foreseeable future, it’s going to be difficult for the state to prove to us it’s worth staying here, but we have to figure something out. “I’d love to come back” needs to be transformed into “I’d love to make it here.”

Liam Nee is a fourth-year journalism and political science student at the University of Maine where he writes for The Maine Campus and hosts/co-hosts three radio shows on 91.9FM WMEB. Nee writes about Maine’s demographic issues in a blog titled ‘Emigrationland.’ He was invited to contribute a guest OpEd for the Maine Chapter of the Scholars Strategy Network, which brings together scholars across the country to address public challenges and their policy implications.

Blog audit

In an effort to engage in a systematic of my writing and to think about the dimension of my topic that I will be exploring more deeply in a few weeks with an analytical paper, I’m auditing my blog. I will attempt to reflect on how Emigrationland has succeeded, failed, redirected or changed within the past eight to nine weeks and begin to pinpoint the exact topic I’ll ultimately be analyzing.

Overall, I’d say this blog has been going quite well so far, for two main reasons: 1) I’m known for swaying off focus in papers. I’ve been losing points in the “topic” category since high school. Thankfully, I’ve been improving with some help from journalistic writing, and I’m proud to say I’ve managed to do a pretty good job of keeping the theme for Emigrationland — a feat in itself considering the scarcity of material to write about, which gets me to reason two: 2) The problems associated with Maine’s age gap and youth exit rates are pretty well known, but not much is being blatantly published about them. You’ve got to dig, and in some cases, use implied thinking to predict what someone or something thinks about problems through their other views on jobs, business, incentives, etc.

Here are my five topic-based blogs:

  1. Where do we begin?
  2. Recap of Maine summit on aging population
  3. The birth rate problem
  4. Gubernatorial stances: Who’s tackling it best? Part 1
  5. Gubernatorial stances: Who’s tackling it best? Part 2

As you can see from titles, the topics have scattered around a bit, but they all have something to do with the age gap and youth exit rates. The first talks about the problem overall; the second recaps a crucial start to the conversation of Maine’s aging population which directly correlates with why many young people choose to leave (it’s boring here); the third talks about the near-epidemic birth rates we’re currently seeing in the state, an effect from the cause of youth exit rates; the fourth and fifth posts round up the most likely candidates for governor of Maine after the upcoming fall elections and analyzes their views on the age gap and youth exit rates.

My posts are slightly varied in topic, but that’s only because I’m attempting to target a different piece of the puzzle each week. If I tried to write a beat on Maine’s age gap and youth exit rates like any other policy issue by simply following news and press reports and action from specific policy groups, I would have a pretty boring beat because there’s really nothing out there. When you’re trying to cover a relatively new policy issue that’s just being discovered, and associated with demographic numbers that can only warn of future effect realization, you’ve got to dig for your content.

One problem I will most likely face when beginning my paper is to whether to target Maine’s age gap or the youth exit rates. Even though the two are directly correlated, I will need to pick one in order to defy broad topic content for my analytical paper. With ‘Emigrationland’ being the name of my blog, I’ve tried my hardest to keep focused on the youth exit rates because I feel like it’s more important, but more often, there’s greater talk about the age gap because it encompasses the entire population and its clearly marked out in our demographic rankings. I will most likely be able to still include both topics, but need to decipher which one I will focus more on.

After revisiting my work, it seems as if I went a little too fast at times. There are a couple minor spelling errors I would fix. However, most of the links I don’t even recall adding really helped refresh my memory.

Blogging has been great and I’ve really enjoyed it so far. I think my research skills (i.e., finding appropriate links that any reader would want as a resource while reading or adding additional statistics to spice up the reading) go far when rereading these posts. I enjoy doing it so the more interested I am in the specific topic each week, the more I try to figure cool ways to make it a better read.

Right now, I would say my topic question would be this: “With Maine’s current demographic issues such as the age gap, how can the government and politicians keep the youth population from leaving?”

Gubernatorial stances: Who’s tackling it best? Part 2

In this edition of looking at Maine’s potential gubernatorial candidates’ views on keeping its youth from leaving the state, we’re focusing mainly on the incumbent governor, Mr. Paul R. LePage, as promised.

In his inaugural address on Jan. 5, 2011, Gov. LePage said he would “spend every day of the next four years working to make Maine a better place for ALL of our sons and daughters to find work, to start businesses and to stay here to start families of their own.” So, clearly, one of his goals from Day 1 was to encourage Maine residents — especially youth — to stay. In a report written after his first 500 days in office, titled ‘Making Maine Prosperous,’ Gov. LePage is credited with proposing “comprehensive education reform with an emphasis on educating our youth to make sure they are prepared for the jobs of tomorrow,” and also posting the famous ‘Open for Business’ sign on I-95 NB. Although both of these actions are related to keeping the state’s youth population here, and also a good steer in the right direction, they’re the only instances the youth exit is mildly touched upon in the report. Three years later, it seems the Governor is somewhat more aware of the problem.

During his State of the State Address on Feb. 4, 2014 [full text], Gov. LePage said, clearly, “we must keep our young people in Maine.” He talked about a Dec. 11 lunch meeting with 20 students from Bowdoin College held at the Blaine House where he asked those invited to bring ideas to fix the youth exit problem. LePage vocally endorsed one student’s proposal, saying, “if you’re going to work in Maine five years, we’ll write of X number of college credits … so, you can literally get the credits for free, but you’ve got to give back to the state … I really like that model.” But, the governor didn’t declare any ideas of his own.

Shortly after mentioning the lunch meeting with Bowdoin students, Gov. LePage jumped straight into job creation statistics, which, I suppose, is a vital part to keeping recent graduates in Maine, and he also offered a fair quote: “Investment capital goes where it is welcomed and stays where it is appreciated.” Maine is having difficulty with the welcoming phase right now, and if you know Mainers, it takes a whole lot of integrity, trust and reliability for any outsider to be appreciated from within even after being welecomed. So, essentially, LePage is indirectly saying Maine’s youth exit will be stopped by three factors: Job creation, appreciated business importation and time.

Perhaps the biggest proposal from Gov. LePage’s SOTS was his ‘Open for Business Zones,’ an idea to “attract companies that will invest more than $50 million and create more than 1,500 jobs” and “choose to locate in certain areas.” The zones, which “[combine] incentives that other states have used to successfully attract major investment” are expected to offer discounted electricity rates, employment tax benefits and access to capital. This, Gov. LePage says, will show young people, like the students from Bowdoin, “[Maine is] serious about providing good-paying jobs and opportunities.”

Gov. LePage also called for “[lowering] income tax rates” and “[eliminating] the estate tax” to “make Maine more attractive for people to work and raise families here.”

Good stuff from LePage in terms of addressing the problem. Like I’ve said earlier, when facing a disastrous demographic slide like Maine is experiencing now, it’s absolutely crucial to actually begin the talk and make people aware of the situation. But you can only do that for so long. Gov. LePage has clearly declared both improvements in the job sector and tax cuts will help the problem, but many other factors can initiate positive results. Like the other candidates, who have dived into education, he could too: A bill that looks to expand Opportunity Maine is waiting to be signed.

 

Gubernatorial stances: Who’s tackling it best? Part I

When attempting to problem-solve a current public policy issue or trend, such as Maine’s “age gap” and youth exit rates, one of the most important components you must incorporate is analyzing governmental leadership — after all, they ultimately make the decisions that will either help or make worse of the situation. So, a great deal of our focus must be put into WHO is in charge and how their views and actions will affect progress. In a more specific, forecasting sense, it is who WILL be in charge that means even more, especially when leadership is on the verge of potential turnover.

Maine is at this very point, and that is why this week’s focus is on Maine’s gubernatorial candidates for upcoming 2014 election. What are their views on the “age gap” and youth exit? Have they declared a stance? If so, what is their plan? Whose plan is better?

First off, let’s declare our potential candidates: Incumbent Governor Paul LePage declared his re-election campaign last July. So there’s your GOP candidate. U.S. Representative Mike Michaud is the only declared Democrat. He announced his campaign last August. And lastly, we have four declared Independent candidates, with Eliot Cutler, a contending 2010 gubernatorial candidate, leading the way.

Let’s start with Cutler. I saw him speak at UMaine last week as a guest lecturer for a Chinese economics course. Despite the obvious topic for the class, Maine’s demographic trends were still brought up in question by students, and Cutler was happy to answer.

Last year, Cutler published ‘A State of Opportunity’ (full version can be found here), a book that outlines his overall plan for the state going forward. During the class, he outlined a few:

“We need a strategy,” Cutler said. “Number one: Keep young people in Maine to keep an educated work force that will bring employees here.”

Creating a strategy is a big deal to Cutler. Most people are aware of the problems and are open to talk about it, he says, but they’re not proposing a plan.

“We have a good record of high school graduation in the state, but there’s a financial barrier,” Cutler said. “Looking at debt is daunting, so we’ve got to create a pay it forward, pay it back program to implement a sustainable cycle for future generations.”

This is undoubtedly true. Student debt is a national problem, but it takes on a whole new creature inside the state of Maine with several students coming from financially deprived families to begin with. Rep. Michaud has implemented specific ways to tackle this problem, as I’ll mention later.

“Number two: Attract young people to Maine,” Cutler said. “Most of the people that come to Maine want to be in Maine, so we need to find ways to attract others who will come for other reasons and realize they wanted to be in Maine too.”

Cutler elaborated on this point, but I missed some of his details. Essentially, he welcomes incentive programs, such as an income tax cut, which would entice out-of-staters, who wouldn’t regularly be coming to Maine for work to come to Maine for work. And, with many of them visiting the state for the first time, he hopes the state’s appeal and friendliness will convince these workers to stay for future generations, thus improving problems with population and the economy. What needs to happen first, though? Employers need to arrive before these workers.

“Number three: Competitive advantage,” Cutler said. “We have land, and we have water, and 1.3 million acres of that land is cultivated. We may have the oldest population in the country, but we also have the youngest population of farmers.”

It makes sense. There’s a reason why we see heavy advertisement from FarmersOnly.com. Cutler says we should move toward utilizing what we have to work with. We don’t have a young population, but a large section of population that is young is deeply interested with agriculture. Let’s embrace that and help them out, Cutler says.

“We have a tax burden, and the biggest problem is the state’s property tax … we’ve cut revenue sharing and the state’s contribution to public education, so local government’s have one option to raise revenue: increase the property tax,” Cutler said. “I think [property tax] is the most regressive tax. Back in the day, it made sense. Property was where most of people’s wealth was, and it was a good proxy, but it’s not the same anymore.”

Cutler outlines even more within his book, but essentially, it all comes down to the economic problem, which is driven by trends associated with population age, and youth exit.

As for Rep. Michaud, he’s hinted at many options to fix the problem. In his economic plan, titled ‘Maine Made’ and released last Wednesday, he touches upon the “demographic winter” and says “our economic future is largely tied to our ability to attract thousands of new working-age residents to Maine every year,” but he omits an essential plan to attract workers to fill the thousands of new jobs he has a clear vision for creating. Quotes from that piece were pulled from a Portland Press Herald article.

A plan that’s gotten lots of attention over the past few weeks that’s surely related to keeping students in Maine is Rep. Michaud’s proposal to make sophomore year at ANY Maine university free for students. He calls it the “community advantage,” and it’s outlined in ‘Maine Made,’ which can be found online here in PDF form, hosted by the Bangor Daily News. Not only would this proposal make college even more affordable for students at the University of Maine and other state schools with already competitively low costs, but also the three NESCAC institutions (Bates, Bowdoin and Colby) who already attract large amounts of out-of-state students, especially from the state of Massachusetts.

I’ll touch upon LePage‘s outlook next week, mainly because this article’s gotten far too long. So expect a Part II in a week or so.

The birth rate problem

Maine is losing population. Again, a statistic we all know. But how exactly is this happening? We know the state’s “domestic migration” is negative. That’s why I’ve created this blog — to try and fix that specific problem. But, to better understand the state’s decreasing population rates, we’ve got to address the real problem, which doesn’t quite have a foreseeable solution in near sight: it’s birth rates.

Death rates are the other side of this graph, but we can’t really do anything about deaths. Most of the people dying in Maine are from natural causes or medical reasons, not crime. The older the population, the more people are going to die. The birth rate is something that could most definitely be improved, and all it takes is some Valentine’s Day flavor and perhaps a comfortable economy — the latter is most likely the reason why some might feel scared to have children, for fear they will not be able to support them or themselves.

Apparently, the term “Demographic Winter” has been used recently by many demographers — with religious ties — to title the declining birth rates found in various countries around the world (e.g., Sweden) and even within our own United States (e.g., Maine). An hour-long explanation of the “Demographic Winter” can be found here on YouTube, brought to us by user UCAGIB. The mirrored username on Twitter belongs to Andrew Freeman, whose bio reads: “I am a devout follower of the LORD JESUS CHRIST…Not white jesus, black jesus, baby jesus, or long haired jesus but the LORD JESUS CHRIST…”

Followers of the “Demographic Winter” essentially believe this: A rise in atheism has increased abortion rates, which has, in turn, lowered birth rates.

Now, I’m not what you would call a religious person — probably just like most of my fellow university students — and I’m not trying to single out this group in anyway. In fact, I’m partially agreeing with them, but only in terms of awareness toward a problem, not in any way their methodology or reasoning. The state of Maine is currently struggling with this problem: Death rates are higher than birth rates. If you can do easy math, that equals a heavy loss in population, especially if the two rates continue to increase and decrease respectively which, according to the latest Census population estimates, they are.

Maine Heritage Policy Center CEO & Chief Economist J. Scott Moody (Twitter), who writes a blog called ‘Moody On Economics,’ really opened my eyes to the actual statistics of this death rate to birth rate phenomenon through a column published Jan. 27. In the piece, Moody explains that despite both the death rate increasing and the birth rate decreasing, its the birth rate that really screws things up because it’s dropped considerably more in comparison to the death rate that’s been slowly rising.

Maine needs more kids, but even when Maine is having kids, they’re being born pre-term, which effects the economy even more long term disabilities down the road. And with the “age gap” upon us and most of the elderly population unable to birth children, it’s up to the youth. Or, as UMaine professor Sandy Caron says, maybe a trend in couples with age difference will help.

Not only does Maine need it’s youth to stay, but now they need them to raise a family. I’ve always said Maine would be a great place to raise a family, and I feel like most people my age agree, but following through with that future goal is key to combating this problem, not tearing down abortion clinics. People need to feel comfortable to start a family, and Maine needs to start providing that.

Recap of Maine summit on aging population

The topic of this week’s blog is a bit old, but it’s definitely worth mentioning — and my excuse for not writing about it earlier is simple: This blog wasn’t even created when the event happened.

The event? The Maine Summit on Aging, held on Jan. 17 at the Augusta Civic Center; organized by Maine Association of Area Agencies on Aging (MAAAA) executive director Jessica Maurer (LinkedIn);  hosted by Maine House Speaker Mark Eves (D-N. Berwick) (Twitter) and the Maine Council on Aging (LinkedIn); and funded by the John T. Gorman Foundation of Portland.

Two articles, from Maine’s Kennebec Journal and MPBN, provide a pretty good rundown of how the summit went, and even The Boston Globe ran an AP writeup online, which highlights main topics, but here’s a quick overview of ideas conjured up through discussion during the Jan. 17 summit:

  • Incorporation of seniors into the workplace (and being friendly about it).
  • Promotion of home-sharing, where seniors live together to “embrace interdependence to have continued independence,” as said by Joan MacCracken, retired pediatrician and author of ‘The Winter House,’ a novel that tells the story of an elderly woman who finds an alternative to living alone on the coast of Maine.
  • Transition of would-be retirees into mentors, like massive construction company Cianbro.
  • Creation of “age-friendly communities” (e.g., low property taxes and rent, walkable sidewalks and social opportunities).
  • Accommodation of the elderly through the changing of local zoning and ordinances.

All these points, proposed by some of the state’s leading researchers on the aging phenomenon that’s begun to “plague” the state, have been brought about by these three striking demographic characteristics:

  • Maine is the oldest state based on median age (43.5 years)
  • Maine is the second-oldest based on proportion of people 65 and older (17%)
  • Maine has the highest proportion of baby boomers [born from 1946-’64] (29%)

As I mentioned in last week’s blog post, the current trend of the state toward fixing this aging problem is really focusing on how the state can use its old population in order to keep the economy afloat by promoting certain things and incorporating seniors into certain things, but there’s really no rhyme or reason to these theories. In the most basic form, yes — make use of what you have most of — but to beat around the dead bush, most seniors are biologically unable to have children, and once they croak, children and youth are the only ones who can “take there place” in both life and demographic census surveys.

Because there’s no quick solution in sight, this summit does prove something worth mentioning: Discussion and awareness of a problem is the first big step. Even if we’re not heading in the right direction, the recognition of a drawback and the initiation of solution conversation is key. That’s why this summit was a great idea, so kudos to those who organized it.

— Liam Nee