VIEWPOINT: Better ways to ease student debt

We’ve seen dramatic increases in college tuition and student fees here in North Dakota. These, however, are symptoms of greater problems caused by a lack of accountability.

It’s no surprise that about the same time the Legislature abdicated its power to the Roundtable and the State Board of Higher Education, these costs started to spiral out of control.

As of 2006, college graduates in North Dakota had the third-highest debt upon graduation, according to the Project on Student Debt. We need to look for ways to reduce the cost of college education for students, the amount of debt those students carry after graduation and the overall cost of government to those graduates.

The cost of higher education for students has more than doubled at all state-run universities and colleges during the past decade, while taxpayer funding has increased by 50 percent in the same time. By increasing the cost to taxpayers and students alike, we continue to price North Dakota out of the market.

There are a few ways we can address the student debt-load issue without increasing spending.

n Increase the grace period for student loans.

Currently, each graduate has six months from the time of graduation before the first payment is due. The Legislature should extend this grace period to one year to allow more time to find a reasonable job in North Dakota and get on their feet.

n Reform the Bank of North Dakota’s student loan practices.

One-third of all Bank of North Dakota profits ($51 million total profits in 2007) are derived from the Student Loan Department. This department should be converted into a not-for-profit operation.

The bank must be allowed to charge an interest rate equal to operating and administering the student loan programs. However, there is no need for a state-run bank to be adding to the debt load and prolonging the payoff of student loans.

n Create a higher education tax credit.

In an age when education costs were paid in the year incurred, treating those costs as a tax deduction effectively encouraged people to go to college. But with the cost of higher education soaring, the costs are much higher than most can afford in a given year. These days, the costs often take the form of student loans, which North Dakota’s college graduates incur at or near the nation’s highest levels.

At the same time, the economic impact of higher education continues to grow. A college graduate may be expected to pay more than $100,000 more in state and local taxes than a peer without a college degree over a lifetime.

We must encourage individuals who have earned a bachelor’s degree to live in the state with a higher education tax credit. The credit would be claimed by those individuals who have earned their bachelor’s degree at a North Dakota college or university within the past 10 years and have established residency in North Dakota during those years.

The credit would be accessed through individual tax filings. In that way, it would not require any new department or agency.