Holding On to Graduates

After several states debate such measures, Maine enacts law to offer broad loan forgiveness to those who stay. Will the plan work?
July 3, 2007

"Brain drain" is a perennial topic in legislatures, as lawmakers worry about whether their home state universities attract the best students and professors. This year, however, the discussion shifted a bit, with several states considering ambitious plans focused on what happens to students after they graduate and whether states could find ways to keep their graduates from flocking to New York City or Boston or the Silicon Valley like so many before them. While such plans have been common for specialized fields -- health professionals in rural areas, for example -- the plans being talked about this year were for all students and had much broader goals.

Indiana had the loudest debate about such a plan, which would have offered $20,000 in forgivable loans to top students who pledged to stay in the state after graduation -- with repayment required if they left. The plan collapsed when some legislators objected to Gov. Mitch Daniels's proposal to pay for it through franchising the state lottery to private entities -- although Daniels, a Republican, is vowing to bring the idea back next year.

In Maine on Monday, Gov. John E. Baldacci, a Democrat, signed legislation to create a loan forgiveness program there -- an idea that came largely from students who said they wanted to make it easier for those who would follow them to Maine colleges to stay in the state. Starting next year, Maine residents who graduate from college in the state will be eligible for 10 years of annual state tax credits of approximately $2,100 if they attended a four-year college and $1,000 if they attended a community college -- provided that they needed the loans as part of a financial aid package. Graduates of private colleges are eligible as well.

The campaign for the tax credits came from student activists who in 2005 worked successfully to help defeat a state referendum that would have reversed a state law barring discrimination on the basis of sexual orientation. "A bunch of us who were working together said, 'Hey if they can do the initiative process to try to do something terrible, why can't we use it for something positive?' " said Andy Bossie, who was then a student at the University of Southern Maine, from which he graduated this year.

Bossie was on his way to wracking up $27,500 in student debt -- not an astronomical sum, perhaps, for those attending elite private colleges, but a hefty amount for someone graduating in a state where salaries aren't typically high. Talking with friends at Southern Maine and elsewhere, Bossie started to hear about more and more students who said that they loved Maine, but were looking for jobs out of state, feeling that the salaries in the state wouldn't give them enough to live on and repay their loans.

About 50 percent of those awarded degrees each year in Maine leave the state (although the figure is inflated somewhat by some private colleges that attract students from national pools, who don't necessarily have a predisposition to want to stay). The students decided to gather petitions to put a referendum on the ballot to create a tax credit and they created the group Opportunity Maine to do so.

"Too many graduates had been leaving the state even though they didn't want to," Bossie said.

This year, the students succeeded in gathering 73,000 signatures -- well more than the 55,000 they needed. In Maine, when an item is declared eligible for the state ballot, the Legislature gets a shot at enacting the measure through the regular legislative process. While it is rare for the Legislature to do so, the campaign for the referendum attracted bipartisan support and the House and Senate sent the measure to the governor, whose signature Monday eliminated the need for a statewide vote on the measure.

Baldacci hailed the measure, saying it sent an important message to students: "If you live, work and pay taxes in Maine, you’re not going to have this student debt hanging around your neck."

National experts on student aid and demographics have been dubious of the impact that tax credits like those in Maine can have. Generally, the criticism is that graduates look for cities with good jobs and -- to a lesser extent -- places they perceive as being exciting places for young people to live. In an opinion piece in Inside Higher Ed in January, Thurston Domina, of the Office of Population Research at Princeton University, outlined the difficulties brain drain states face in keeping their talent.

Some in Maine worry that the state may not get the transformation it is seeking with the tax credits. But many are hopeful and see evidence that the plan could make a difference.

Libby Heselton, a career counselor at Bowdoin College, said that as a Maine resident, she signed the petition to put the tax credits on the ballot and was excited to see the idea enacted into law. She said it's hard to predict how much impact the tax credits will have with her students. But she said that many of them do say that "they'd love to stay in Maine, but sense that there's more money elsewhere." The extra help from the state might be enough to make Maine jobs more competitive, she said.

Cathy Marquez, assistant director of employer relations at the University of Maine, in Orono, said that she was concerned that some of the publicity about the campaign might send the wrong message about her graduates, 70 percent of whom stay in the state. She said that the greatest impact may be on students who aren't on the business and engineering track, but who want to work for nonprofit groups or schools or social service agencies. The low salary base for many such jobs in Maine leads graduates to look to Massachusetts and Connecticut, even if they have strong ties to the state, Marquez said. "I think this could be a huge shot in the arm for those in human services," she said.

And attracting more good schoolteachers and social workers may improve the state long term in ways that will attract more businesses, too, she said.

Bossie, the chief organizer of Opportunity Maine, said he realized that the availability of jobs and the choices of graduates are related. But he said that the tax credits will succeed in part because of other efforts going on to attract new businesses -- and because there are jobs today that go unfilled because graduates leave the state.

A Caribou, Maine native, Bossie has accepted a job in Augusta with the Maine AIDS Alliance. Because the tax credits are not retroactive, they won't help him -- and he's getting ready to start writing checks of about $250 a month.

But he said that students had accomplished something for those entering college now. And Bossie said he also has the benefit -- through answering questions about student loans with examples from his own situation in interviews all over the state -- of having "the best known student debt in Maine."


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