April 07, 2020

College tuition plans earn passing grades > Mitchell working on `first year free’ idea

AUGUSTA — It could be the tale of many families: After putting the kids through college, the parents face the specter of mounting debt and kiss hope of early retirement goodbye.

On Wednesday, the tale was told by House Speaker Elizabeth Mitchell, who is preparing to send her fourth child to college.

“I speak to you as someone who will be in debt for the rest of her life, who will not be retiring early and who has less equity in her house than when she started,” the Vassalboro Democrat told the Legislature’s Education Committee.

To help other parents avoid such scenarios, Mitchell and others are sponsoring a host of bills to create college savings plans and prepaid tuition plans. The proposals aim to help primarily middle class families to save for their children’s college educations.

Although the plans gained mostly favorable reviews from those attending a public hearing Wednesday, the bigger buzz in the state capital is about a plan that Mitchell has yet to unveil. That plan would allow qualified students to attend their first year at a public college or university tuition-free.

Mitchell refused to divulge details of her proposal, which others said would be called the Maine First Scholars program, but confirmed she was working on it.

“I need to take time to think it through,” she said in an interview on the State House steps. “I’m still doing my homework.”

An aide said the details of the plan would be revealed “soon.”

Although the “first year free” plan is still in the works, it is already gaining favorable reviews.

“This is a watershed opportunity … to create more opportunities for Maine’s young people,” the chancellor of the University of Maine System, Terrence MacTaggart, said of the various proposals in an interview earlier this month.

“Anything that makes it easier for families to save for the education of their kids … we support,” he said.

Tuition savings plans help more students attend college 10 or 15 years down the road, but the first year-free plan would help families right now, MacTaggart said.

Testifying before the Education Committee, Timothy Agnew, chief executive officer of the Finance Authority of Maine, refered to Mitchell’s plan as “a good start.”

Charlie Mercer, director of FAME’s education assistance division, said Mitchell’s plan would help the poorest students aspire to college.

Savings plans help middle income families that can set money aside, but they don’t do much for families that have so little money they assume higher education is out of their reach. Mitchell’s proposal would open college doors to those people, Mercer said. Once low-income students spend a year in college, they will see they can survive in the campus environment and will be more likely to take out loans and work to pay for additional years in school.

A study by FAME, the state’s higher education loan guarantee agency, last year found that while most Maine students and their families valued higher education, many felt college was a luxury they could not afford.

A plan similar to what Mitchell will propose has been in place in Georgia for several years. The state’s Hope Scholarship program entitles qualified students with at least a B average, to get one year of college for free.

Mercer suggested the money for Maine’s program could come from the state’s budget surplus.

On the proposals that have already been submitted, the Education Committee heard much support — and no opposition — to the idea of establishing some type of college savings plan or prepaid tuition plan.

The savings plan would allow parents, or other relatives, to set aside money free from state taxes that would later be used to pay college tuition. Depending on which plan is adopted, the money could be used at in-state or out-of-state public or private institutions. The earnings on such plans might also be exempt from some federal taxes.

The prepaid tuition plans being considered allow parents or others to buy blocks of tuition at colleges at today’s prices plus an inflation adjustment factor. Some of the plans are limited only to the state’s public universities, while others make provisions for use of the money at private or out-of-state schools. Such plans are often very expensive to administer.

Some committee members were concerned that the plans tend to favor public schools over their private counterparts and that the savings and prepayment plans could encourage schools to raise their tuitions.

Nearly 20 states now have some version of these plans and another 11 states are considering their creation.

Lawmakers are likely to combine the five bills that were considered Wednesday into one piece of legislation.

“This could be one of the major pieces of legislation this committee produces this session,” said Rep. Carol Kontos, D-Windham, who withdrew her prepaid tuition bill to allow the committee to focus on other proposals.

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