Rider Brandau is a low-income, first-generation student at Elizabethtown College.
“When students borrow money for college, they agree to pay back that money,” Brandau said. “I will owe roughly $30,000 upon graduation, which is a fair price for what I have received from Elizabethtown.”
Many students share his experience. About 1.8 million Pennsylvanians have student loan debt. The state also has the highest per-person student loan debt, with an average graduate debt of approximately $36,000, according to state figures from 2017.
Private lenders and bonds offer student loans with interest rates of eight percent or higher. To combat the student loan epidemic, Pennsylvania state senators Vincent Hughes (D-Philadelphia/Montgomery), Katie Muth (D-Montgomery/Chester) and Lindsey Williams (D-Allegheny) proposed the PA Student Higher Education Lending Protection Act (HELP) in late March.
The HELP Act is modeled from a similar refinancing plan currently used in Connecticut, according to Sen. Hughes’ website.
HELP finances 10-, 15- and 20-year student debt repayment plans at a fixed, annual rate of four percent. The proposal also allows Pennsylvanians to claim a $500 tax credit on student loan debt and similarly enables employers to contribute to tax-reduced 529 accounts, incentivizing the payment of employees’ student loan debt. Lastly, it boosts tuition transparency by requiring institutions of higher education to present the estimated cost of four years’ study to prospective students.
Bond costs for the fully-implemented Student HELP program would total approximately $80 million annually, according to Sen. Hughes, the Democratic chair of the Senate Appropriations Committee.
The program would be administered by the Pennsylvania Higher Education Assistance Agency (PHEAA) and would be funded by up to $1 billion in bond financing.
In the short term, HELP’s immediate financial relief could stimulate local economic growth and increase loan payers’ quality of life. In the long term, it is poised to increase the accessibility of education for those who could not previously afford to further their education.
In the wake of the HELP Act’s proposal, competing legislation has gained traction. One such example is the Student Loan Refinancing and Recalculating Act, introduced by Pennsylvania state representatives Brian Fitzpatrick and John Garamendi.
Still, other proposals advocate for free public education. New Jersey governor Phil Murphy’s 2018 campaign promised tuition-free community college. This sort of program is popular with voters.
However, others are critical of the approach’s effectiveness.
“It would be pointless and counterproductive to publicly fund college tuition for all students,” Brandau said. “I strongly support refinancing and consolidation programs like the HELP Act. We don’t need to be profiting off our students beyond reasonable interest rates. Grants for low-income students need to be expanded as well,” Brandau said.
Once fully implemented, HELP will assist an estimated 28,000 students in refinancing their high-interest student loans. Although the proposal is not yet finalized, it has received positive endorsement from Etown students such as Brandau.
“The HELP Act is a welcome and practicable first step that doesn’t threaten the stability of the market or prompt colleges to raise tuition due to open-ended availability of government-backed funding for all,” Brandau said.
