AUGUSTA — Last year the average student debt of recent Maine college graduates was $30,908, the seventh highest in the nation.
This year that student loan debt statistic dropped to $29,644, the 14th highest in the country, “which is great news,” said Martha Johnston, director of education for the Finance Authority of Maine.
According to the Project on Student Debt by The Institute for College Access and Success, the national student loan debt average is $30,100.
Maine’s drop is a good decline, Johnston said. But owing $29,644 is a lot for a state where incomes are low.
Slightly more than 10 percent of Maine students with loans are defaulting on those loans, according to the U.S. Department of Education. Nationally the default rate on student loans is 11.3 percent. But those numbers don’t include people struggling to pay back students loans who have deferred, or put off, paying those loans.
People at greatest risk are those who have student loans but don’t have degrees, Johnston said. “Not finishing your education places you at greater risk for default even if your loan balances are fairly low because your wages are lower without your educational credential.”
More is being done to warn current high school students about problems caused by high student loan debt — awareness that FAME promotes through its College Access and Financial Education Program.
A way more Mainers are minimizing debt is by attending the first two years of college at a Maine Community College System campus.
Since former Gov. John Baldacci in 2003 led the charge to turn Maine’s vocational technical colleges into the Maine Community College System, community college enrollment has jumped 71 percent. The community colleges now educate 36 percent of all public college students in Maine, said MCCS spokeswoman Helen Pelletier.
One reason Maine is 14th highest in student loan debt, Johnston said, is because college educations in New England are more expensive than other parts of the country on average.
The recent average student loan debt for most New England states is higher than Maine. New Hampshire has the highest student loan debt in the country at $36,101; Connecticut is No. 3 at $34,000; Rhode island is No. 5 at $32,920; and Massachusetts is No. 7 at $31,666. Only Vermont at $28,000, is lower than Maine.
College degrees are essential for success, and most students do have to borrow to go to college, Johnston said.
But she advocates students be informed borrowers. Don’t sign until you know what you’re signing.
“Do the research,” Johnston said. “Understand what you can reasonably afford after you graduate.”
FAME offers a student loan/salary calculator on its Web page that offers insight on the salaries of various professions and what amount of debt would be affordable. To find out what jobs pay, go to www.careeronestop.org/toolkit/wages/find-salary.
For instance, if a student wants to become an athletic trainer, find out what a starting athletic trainer makes and, based on that, how much debt they can safely take on, Johnston suggested.
“A good rule of thumb is borrow no more than what you anticipate you’ll make your first year out of college,” Johnston said. For most people that will mean keeping student loan debt at $30,000 or lower. Make sure a student loan payment will be no more than 8 to 10 percent of your monthly income, she said. “Anticipate and budget.”
FAME is concerned about Maine students graduating from college with too much debt. Even if a person declares bankruptcy, they still have to pay their college loans, Johnston said.
To ensure that students only borrow what they need, students, parents, school counselors and colleges need to invest time and talk openly about what it means to borrow, she said.
The cost of college
Typically a year’s tuition at a two-year Maine community college is about $3,500 for a Maine student. That does not include room and board.
The cost to attend a University of Maine System university is about $18,726 for a Maine student; that figure does include tuition, room and board, and fees. (The cost is often lower, since that figure doesn’t consider grants or scholarships.)
Sensitive to the burden on students and families, the University of Maine System has frozen tuition costs for six years, said system spokesman Dan Demeritt.
The cost for a private college varies widely and can be more than $50,000 a year for tuition, room and board.
Experts recommend high school students apply at several colleges, public and private. They might get a great financial offer that makes an expensive private school about the same price as a state college.
But, experts note that in the spring, when that award letter arrives in the mail, read the individual costs closely to clearly understand what the student’s and family’s financial obligation will be.