Congressman Scott Peters

Representing the 52nd District of California

Bills aim to help college students

Apr 3, 2015
In The News

Gary Warth - Two lawmakers from San Diego have proposed legislation that together aim to eliminate college tuition hikes while helping students pay off debt and graduate on time.

Rep. Scott Peters, D-San Diego, is pushing a measure that would give tax breaks to employers who help pay off their employee’s federal student loan debt.

State Sen. Marty Block, D-San Diego, has proposed a bill that would reward students $4,000 for graduating on time, expand grants, increase course offerings and hold off proposed tuition increases at the University of California. The $350 million price tag of his bill would be paid by the state general fund, nonresident tuition increases and scholarship funds.

He would fund the bill with hundreds of millions of dollars from the state general fund.

Peters said his H.R. 1713, first introduced last year and reintroduced March 26, would give tax breaks to employers who contribute up to $6,000 a year toward an employee’s student loan payment. Employers could contribute as much as $50,000 overall.

“I have friends who are employers and they say their goal is to help their employees pay of their student loans,” Peters said about the idea behind the resolution.

Similar to a 401K plan, the employee and employer each would determine how much to pay toward the student loan each month.

But why would the federal government give a tax break to get back its own money?

Because, Peters said, it is better than not getting repaid at all.

The Federal Reserve reported in February that about 11.3 percent of student loans were in default, or more than 90 days past due, in the last quarter of 2014.

The outstanding debt comes to $1.16 trillion, second only to mortgage debt in the nation, according to the Federal Reserve.

A news release from Peters’ office cited a 2013 report from the Institute for College Access & Success that states the average college student loan debt was $28,400 with an interest rate of 3.86 percent.

A graph prepared by Peters’ staff showed a $28,400 loan would be repaid in 10 years using the average annual payment of about $3,500. That same debt would be paid off in four and a half years if an employer matched the employee’s payment, and it would be paid off in just over three years if employers made the maximum contribution.

Peters’ bill has been supported by the National Education Association, Association of American Universities, American Council on Education, Student Debt Crisis and uAspire.

Block’s proposal, Senate Bill 15, is scheduled to be heard by the Senate Education Committee on Wednesday. Block, a member of that committee and chair of a budget subcommittee overseeing education financing, said the bill is an alternative to tuition hikes proposed by the University of California.

The idea behind the bill is to make the UC and California State University systems more efficient by expanding classes and creating incentives that result in students graduating within four years.

Block said many students take five or six years to graduate because they can’t get the classes they need. Helping them graduate in four years will get them into the workforce faster, helping California fill a need for professionals in many fields while opening up more rooms for incoming students.

The bill would provide $150 million to the UC and CSU systems to expand support services that help students graduate in time. Of that money, $25 million would go to each system to increase the number of certain courses that are in high demand and often full, causing students to delay their graduations.

Another $113 million would be used to fund enrollment growth at the UC and USC systems. Cal Grants would receive $9 million and an additional 7,500 Competitive Cal Grants would be created with $22 million.

New “Completion Incentive Grants,” funded with $48 million the first year, would reward students for completing a certain number of credits each semester to stay on track to graduate. A student who graduates in four years will receive $4,000, Block said.

The introduction of the bill was timed so it would be named SB15 as a reminder for students to take 15 units each semester to graduate on time, Block said.

In all, the cost of the bill would be $342 million in the 2015-16 school year, increasing to $387 million next year and $434 million the following year.

Funding sources include $156 million from the general fund, $82 million in increases to UC nonresident tuition fees and $102 million from the Transition Middle Class Scholarship program. Block said that scholarship could be preserved, however, with more money from the state.

The bill is contingent on the UC Regents backing off a proposal to increase tuition by 5 percent each year for five years.

UC President Janet Napolitano has said the tuition cuts would not be necessary if the state provided the system $100 million. Gov. Jerry Brown opposed the tuition hike but also opposed funding another $100 million. Instead, he proposed increasing funding by 4 percent annually for two years, but only if tuition remained at the 2012 level for four years.

Last year, Brown opposed attempts by lawmakers – including Assembly Speaker Toni Atkins, D-San Diego – to put more money into UC and CSU beyond what he had budgeted.

Block said he think his proposal could be a better alternative to what has been debated so far.

“We think the governor will see the wisdom of this,” he said. “The governor’s been a strong proponent of efficiency in education. ‘Use your dollars more efficiency’ is what he keeps saying to Janet Napolitano. Getting students out in four years is a much more efficient expenditure.”

San Diego State University student Rachel Beck, 19, said she saw how both bills could help students. Some of her friends can’t get business classes they need to graduate on time, she said, while others delay graduating because they work to support themselves rather than take out student loans.

“I think student loans are a huge scare for a lot of college students,” she said.

 

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