The Student Loan Crisis
Last week, the Massachusetts State Senate voted unanimously to become the first state in the nation to create a tax deduction for families and graduates who pay interest on student loans.
The Senate's budget proposal will allow parents and recent graduates to deduct one-half of the interest paid on undergraduate student loans from their Massachusetts income tax. As the chief sponsor and author of the student loan tax cut, I am pleased that the Senate has taken a leadership role on an issue that will help working families afford a college education.
The Massachusetts economy has flourished because of our commitment to higher education. Massachusetts' economic growth rests with the young men and women designing new products, writing software codes and building a stronger economy with ingenuity, hard work and determination.
Yet, there is a shortage of highly-trained workers in Massachusetts. Companies have dozens, even hundreds of unfilled, high-wage positions. One fact is clear: our policies should be targeted at expanding the pool of highly-skilled workers. Our strategy should reinforce Massachusetts' leadership in higher education and create incentives for individuals to invest in their own educational advancement.
The escalating cost of higher education and the back-breaking burden of student loan debt threaten to make college unaffordable for working families.
The trends are clear:
* In 1996, the College Board reported that in the past fifteen years college costs have almost doubled, far outpacing family incomes and the consumer price index.
* Last year, students in the Northeast borrowed over two billion dollars to pay for higher education.
* In Massachusetts, students borrow six dollars for every dollar available in grants.
* Over 60 percent of our college graduates borrow to pay for their education, and the average graduate comes out of college with between $10,000 to $15,000 in student loans.
Today, someone graduating from a private institution can easily graduate with debt in excess of $50,000. At some point, student loan debt begins to cross the line from opening opportunities to closing them off.
For some graduates, debt destroys the possibility of a graduate school education. For others, it closes opportunities because marriages and first homes are deferred. For others still, debt ties them to jobs about which they feel little passion.
Today, graduates must begin burdensome payments on their student loans only six months after graduation. Our economy suffers as a result, because these graduates are unable to buy homes or start businesses. For policy-makers, the crisis of student loan debt creates a new challenge. We must find creative ways to make college more affordable.
During the next month, a House-Senate Conference Committee will meet to resolve differences between the House and Senate versions of the budget. We must urge the Committee to write into law the student loan tax cut proposal.
Educational leaders such as President of the New England Board of Higher Education John Hoy and President of the Association of Independent Colleges and Universities Claire Cotton are working with me to promote the student loan tax cut. Dozens of students made their way to the State House during their final exams to testify in favor of the bill at a public hearing earlier this month. But we cannot do it alone. I urge you to contact your state legislators in support of the student loan tax cut.
Massachusetts State Senator Cheryl A. Jacques is chair of the Senate Committee on Post Audit and Oversight.