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State Lawmakers Are Seeking Solutions to Rising Student Loan Debt

There is help available for some of the 40 million Americans dealing with $1 trillion in student loan debt, but the aid comes with a catch.

You have to move to Maine, or maybe Michigan or Wisconsin.

Those are the only states actively pursuing solutions for student loan debt problems, though each state would require you to go to school there and stay to work after graduation. That’s a little bit of a reach, but at least it’s an attempt to address a problem that is growing to epic proportions.

Student loan debt has soared 362 percent in the last decade (from $260 billion to $1.2 trillion), and 70 percent of college students graduate in debt. The average college graduate owes $26,600 and 10 percent have more than $40,000 in loan debt. The Consumer Financial Protection Bureau reports that 7 million borrowers are in default and half the student loans have been deferred.

Politicians and economists agree this is a complete drag on the economy, affecting choices like marriage, starting a new business, purchasing cars or homes and relocating to new jobs.

Not Washington’s Problem

Yet in Washington, the federal government is doing all it can to ignore the issue. Members of Congress have introduced five bills in the last year that might provide some relief, but not one has made it out of committee — let alone been put to a vote.

“We’ve given up on waiting for solutions from Washington,” said state Sen. Glenn Anderson, D-Westland, sponsor of student debt relief legislation in Michigan. “There is so much paralysis going on there that it doesn’t seem like anything is ever going to get done.”

“I don’t think anyone can figure out how they make things work in Washington,” Rep. Catherine Nadeau, D-Winslow of Maine said. “The student loan problem has reached a crisis level in our state and we know we’re going to have to solve it on the local level.”

Maine is the only state to take definitive steps to relieve the anxiety associated with student loan debt. The state passed the Education Opportunity Tax Credit bill three years ago that provides as much as a $4,272 tax credit to graduates from Maine colleges and universities. The one hitch is you must stay and work in Maine after graduation.

Michigan has a similar proposal that would offer a tax credit of up to 50 percent of the student’s loan repayment as long as they are employed in the state. The Michigan Senate is expected to pass the bill later this month and send it to the state House, where its future is up in the air.

Wisconsin’s bill, dubbed “Higher Ed, Lower Debt” has had public hearings in both the state Senate and House. It would allow graduates to refinance their student loans under a state authority at rates the sponsors hope would be under 4 percent.

Stemming the ‘Brain Drain’ in Michigan

Amazingly, only 1,157 graduates took advantages of Maine’s tax credit offer in 2012. Lawmakers say part of the reason is lack of a marketing campaign — students aren’t aware of the program — and the other part is that wages in the state are too low to keep graduates home.

“These kids are going to live where they can make enough money to pay back those loans, and our wages in Maine aren’t high enough to compete with that,” Nadeau said.

A 2011 survey showed that 50 percent of the 300,000 graduates from Michigan state universities leave after graduation. Anderson thinks his bill to assist graduates with student loan debt might reverse the trend he calls a “brain drain.”

“We spend a lot of money on the front end to fund top-notch facilities and great faculties at our schools, then, we let the kids leave the state and take what they learned with them,” he said. “That doesn’t make any sense for our economy. We can’t train these students and then let them take their talent somewhere else. We need it right here in Michigan.”

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].

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    1. Denhart, C. (2013, August 7) How The $1.2 Trillion College Debt Crisis Is Crippling Students, Parents And The Economy. Retrieved from
    2. Silvernail, D., Gollihur, G. (2003, February) Finding Maine's Future Workforce. Retrieved from:
    3. Rowan, R. (2014, January 9) Opportunity Maine Offers Tax Credits for Student Loans. Retrieved from
    4. Herzog, K., Mulvany, L. (2013, October 23) Bill sponsored by Wisconsin Democrats would ease student loan debt. Retrieved from
    5. Bergeron, D., Baylor, E., Valenti, J. (2013, November 21) Resetting the Trillion-Dollar Student-Loan Debt Problem. Retrieved from
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