Hogan unveils student debt and tuition relief plan

By Alex Mann

On Jan. 10 Maryland Gov. Larry Hogan announced an initiative to relieve student debt and invest in projects at various colleges and universities around the state.

“Having a college education is more important now than ever before,” Gov. Hogan said in a press release, “but the harsh reality many face today is that earning a college degree often goes hand-in-hand with accumulating crippling college debt.”

However, a representative from the Maryland Public Policy Institute worried the governor’s plan would in fact benefit wealthy families over low income students.

Hogan’s plan includes three measures: The Student Debt Relief Act of 2017, a tuition relief initiative and an investment in higher education.

Student Debt Relief Act

Under the Student Debt Relief Act of 2017, most Marylanders will be able to deduct 100 percent of interest paid on their student loans from their income taxes. Come 2018, Maryland residents earning less than $200,000 annually, or $250,000 combined for couples, will not pay any Maryland income tax on their student loan interest payments. The policy is expected to save Marylanders overloaded by student loan debt approximately $20 million annually.

Mihir Khetarpal, Student Government Association director of governmental affairs at the University of Maryland, said the SGA voted to support the bill.

“On the face of it, we’re excited that the governor is proposing the Student Debt Relief Act,” Khetarpal said. “There should be, one, tuition relief, and two, if you’re making payments on loans, you shouldn’t have to pay a tax on those payments.”

Tuition Relief

The tuition relief initiative is aimed at making Maryland’s public colleges and universities more affordable. Maryland universities asked to raise tuition by 5 percent in 2017, according to a Jan. 10 press release. In response, Hogan announced that the state would partner with these institutions to cap tuition growth at 2 percent by investing $17.5 million.

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“Compared to the rest of the country that kind of tuition increase, of two percent, is much lower than what other states are experiencing,” Mike Lurie, media relations manager for the University System of Maryland, said. “We’re seeing, routinely, states having to increase tuition by 6 percent annually or 7 percent or 10 or 11 percent certain years.”

All institutions in the University System of Maryland, Morgan State University and St. Mary’s College will have tuition growth capped at 2 percent.

“It’s not enough,” Khetarpal, a junior government and politics and economics double major, said. “I don’t think anyone really thinks this ultimately is a final solution.”

Khetarpal thinks people are happy about the 2 percent cap because, until the official budget was released, it had appeared as though the increase would be far greater.

Though the two percent cap on tuition increases won’t help more low-income students get to college, Khetarpal said, “I think it’s a means to not make the problem worse than it already is.”

Tom Firey, a Senior Fellow at the Maryland Public Policy Institute, fears that this initiative will experience problems similar to those of mortgage interest deduction on the federal level – with wealthier families more likely to reap benefits or to use it for tax breaks.

Mortgage interest deduction allowed taxpayers to deduct their mortgage interest from their taxable income, creating an incentive for people to buy houses, even if they weren’t qualified. The incentive was that the bigger the mortgage, the bigger the tax break would be.

“It would be regressive, even if it is limited to people earning $200,000 a year or less,” Firey said. “On average, people with college degrees earn considerably more than people without, and people from wealthier households are far more likely to attend—and graduate from—college. It would be regressive to give a blanket tax break to all those households.”

Firey said that, in comparison to the Governor’s action, financially disadvantaged students would be better served if the General Assembly boosted need-based aid.

Khetarpal agreed that this legislation will not make it easier for people to access higher education, but said that it’s important to ease the burden on students who have to take out loans to pay their way through college.

New Investments

Gov. Hogan also announced a $380 million investment for higher education projects in the 2017 Capital Budget.

“We believe that our new Student Debt and Tuition Relief Initiatives will provide much-needed relief from student loan debt, and will help us continue to make college in Maryland more affordable,” Hogan said.

The investments include: $89 million for construction of the new Biomedical Sciences Education facility at the University System of Maryland, Universities at Shady Grove Education Center; $40 million to continue construction of the Interdisciplinary Life Sciences Building at the University of Maryland, Baltimore County; $26 million to start construction for a new science facility at Towson University; $9 million to begin construction of Morgan State University’s Student Services building; $25 million for continued construction of the James Clark Bioengineering Building at the University of Maryland, College Park.

In addition, $56 million will be directed to Maryland’s community colleges and another $8 million will be dedicated to projects at Goucher College, McDaniel College and St. John’s College.

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