State senator's program attempts to ease student debt

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HARRISBURG -- A Pennsylvania lawmaker is asking colleagues to consider a program aimed at easing the debt load of some students in technical fields while keeping them in the state.

Pennsylvania's students are currently the third-most indebted in the country, according to the Project on Student Debt, a nonprofit that tracks student borrowing. Among 2012 graduates, 70 percent had taken out loans, owing an average of $31,675.

Many can't -- or don't -- pay. According to the U.S. Department of Education, about 11.9 percent of Pennsylvania students default on federal student loan payments within three years.

Policymakers are looking for ways to ease the burden of rising tuition.

Gov. Tom Corbett, for example, included $25 million in grants to help middle-income post-secondary students in his proposed budget for next year.

Sen. Rob Teplitz, D-Dauphin, announced in a memo last week that he plans to introduce legislation under which a state program would pay the tuition at Pennsylvania colleges and universities for students in approved science, technology, engineering and math (STEM) programs.

Unlike traditional loans or scholarships, Mr. Teplitz's proposal would create a fund that pays students' tuition up front. In exchange, recipients -- 100 during the first year and 50 in subsequent years -- would pay 5 percent of their income back into the fund for 20 years after graduation. The plan would require students to sign an agreement to remain in Pennsylvania for five years after graduation to keep sought-after workers in the state, the senator said.

Mr. Teplitz's proposal includes a ballot referendum asking voters to borrow $50 million to get the program up and running -- a provision not likely to be popular when money is tight.

Last month, the state Independent Fiscal Office issued a report predicting a $1.3 billion shortfall in revenue over the next year.

"Given the revenue situation this year, any bill that proposes new spending has a high hurdle to overcome," Erik Arneson, a spokesman for Senate Republicans, wrote in an email.

The proposal is similar to Pay It Forward, a program the research group Equal Opportunity Institute designed to increase low- and middle-income students' access to college education. And it may meet the same fate as a bill Rep. Brandon Boyle, D-Philadelphia, introduced last September proposing a study of the impact Pay It Forward would have in Pennsylvania. The earlier bill never advanced beyond the House Education Committee.

Whether legislators should place a premium on qualified STEM workers depends on which think-tank you ask.

The Economic Policy Institute -- which gets about a quarter of its funds from labor unions, according to its website -- reported last year that only about half of majors who graduate from U.S. schools go on to get jobs in those fields. EPI used its findings to oppose allowing more high-skilled guest workers into the United States.

The Information Technology and Innovation Foundation, whose mission includes "documenting how advances in technology are creating new opportunities to boost economic growth," has since countered this argument by pointing out that graduates of STEM programs are more likely than other graduates to find a job using their degree.

Mark Kantrowitz, publisher of Edvisors Network, a company that provides information about degree programs and student loans, said programs like Mr. Teplitz's and Pay It Forward would still mean debt for students.

"All such proposals do is change the nature of the loan, from a fixed monthly payment to a monthly payment based on a fixed percentage of income," Mr. Kantrowitz wrote in an email.

Higher-earning graduates would have to pay more in later years than less successful peers, he added.

Kelli Smith, education policy associate with the Equal Opportunity Institute, said the program would make education more affordable to lower-income students who have trouble paying tuition or taking out traditional loans. She stressed that the programs are voluntary, allowing students to decide if participating is in their best interests.

"We don't mean that Pay It Forward is a panacea," Ms. Smith said. "But it is a step forward to increasing access [to higher education]."

Gideon Bradshaw is an intern with the Pennsylvania Legislative Correspondents' Association.

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