Are MD students able to repay their college loans?

Maryland college students in most parts of the state have lower student loan delinquency rates than the national average, according to new data from the Federal Reserve. However, some counties have much higher delinquency rates - up to 25 percent or more.

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The current issue of the Federal Reserve Bank of Richmond’s 5^th District Footprint publication focuses on the rates of student loan delinquency (the number of student loans that are at least 30 days late) as of March 2013 for the region comprised of Maryland, North and South Carolina, Virginia, Washington D.C., and West Virginia. The study finds that delinquency rates in most of the region’s counties differed little from the national norm, but for those counties with higher rates, nearly all had median household incomes below national and state median levels, as well as higher than average rates of poverty and unemployment for its college graduates. Nationally, the rate of student loan delinquency is currently 11.8 percent (up 2.3 percent from last year), with the average student holding $24,755 in this difficult to discharge form of debt.

The issue of student loans is especially salient now because if Congress does not act to prevent it, the interest rate on subsidized Stafford student loans will double on July 1st, rising to 6.8 percent. According to a report recently released by the Maryland Public Interest Research Group, the average Maryland student graduates with over $24,000 in debt, and this rate increase would cost Maryland students over $95,469,000, amounting to roughly $900 per student, per loan. This hurts students from lower-income families, as only students from families with incomes less than $50,000 are eligible for these subsidized Stafford loans.

Graduation, Education, and Sequestration

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With all of the June graduations around Maryland, it's a good time to think about our investments in children and their education.

The American Prospect recently issued a special report that examines the effects of the economic downturn and America’s budgetary reactions on the nation’s youth. In its first article, “The Children of the Great Collapse,” Jared Bernstein looks primarily at the national effects of sequestration on low-income children and families, with additional commentary about how further cuts in Paul Ryan’s budget proposal could make matters worse. Bernstein explains that while the helpful stimulus of the Recovery Act prevented millions of children from slipping into poverty during the height of the Great Recession, now that the apparent crisis period is over and this aid to individuals and states has long been spent, working-class Americans may actually suffer worse now in the period of “economic recovery,” as wages and opportunities stagnate.

The emerging effects of sequestration and other Congressional budget fights push attainment of the American Dream farther away for low-income citizens by reducing the possibilities that come from a robust education system. Funds for public schooling have declined for the very beginning of a poor child's education up through the college level. The sequester’s automatic spending reductions cut roughly five percent of federal funding for Head Start. That may not sound severe, but the National Education Association estimates this will reduce access to public preschool programs for roughly 50,000 American children. Over 13,000 Maryland children took part in the program last year, and in most counties, over 90 percent of children eligible for the program were enrolled. This blind budget cutting will reduce access to early education for low-income families and will leave many children unprepared to start their education.

Local K-12 education also feels the pain of these budgetary contractions since, as Bernstein points out, federal aid to local schools makes up over eight percent of the sequestered federal dollars. Much of this money would have targeted schools in low-income communities. As for higher education funding for low-income young adults, if the Ryan Budget became law, funding for the Pell Grants that help millions of college students afford higher education would be frozen at current levels, while tuition around the country rises.

All this comes as Maryland has made progress in educational achievement among its low-income students, according to Education Sector, a nonprofit, nonpartisan think tank on education policy. The organization’s recent special report studied students’ scores on the National Assessment of Educational Progress tests between 1995 and 2009. It shows that Maryland has made more progress than any other state in improving achievement in reading and math scores of free-and-reduced-price-lunch eligible fourth and eighth grade students. The state raised scores of its economically disadvantaged students on average by more than 50 points. That is nearly twice the national average for improvement. It indicates that these Maryland students have attained an increase in nearly two additional years of learning. 

Cuts to school aid risk derailing the state’s trajectory in this area.

Sequester supporters in Washington argue that this austerity move helps reduce “government waste” and will result in a leaner, more efficient government. Local critics of government stewardship of public funds point to Baltimore City’s school system, which has been in the news recently after a federal audit uncovered some extravagant and unnecessary spending. 

Of course, in both good and bad economic climates, school system officials need to use the public dollars they are allocated wisely and responsibly. And of course when they do not, they must be held accountable. However, despite these sensational findings, evidence shows that our public school dollars are improving teaching and learning in classrooms around the state, and we are getting results that will help Maryland’s economy, communities, and families for a generation to come. We’re getting a great return on our investment in education. Now is not the time to divest in our future.

Week Ahead

Last week we blogged about Maryland's economic growth in 2012.

Also last week, the Tax Foundation released a study that named Maryland the most generous state, based on percentage of state taxpayers claiming charitable deductions on their 2012 returns.Over forty percent of Marylanders took this deduction last year, with a median charitable donation of $2,969 and an aggregate state contribution of nearly $4 billion. (Note that MBTPI and others have  shown that the Tax Foundation's Business Tax Climate and "Tax Freedom Day" studies are not a good guide to states' tax policies. This data from the the Tax Foundation on charitable deductions is okay).

Additionally, the Bureau of Labor Statistics (BLS) released its monthly employment figures last Friday, showing the nation's private sector added 178,000 jobs in May. Workforce participation and unemployment both grew by 0.1 percent last month as more people sought work.

For the week of June 10th through June 16th:

• On Monday, June 10th, the Maryland Community Health Resources Commission is hosting a public forum with the Maryland Health Benefit Exchange and the Department of Health and Mental Hygiene for safety net providers, MCOs, and commercial carriers from 1pm to 3pm at the Todd Performing Arts Center Lobby at 1000 College Circle in Wye Mills.
• On Tuesday, June 11th, the Maryland Commission on Cybersecurity Innovation Excellence meets to report on its activities at 9am in the University of Maryland University College's Salon A at 3501 University Boulevard East in Adelphi.
• Also on Tuesday, the Advisory Council for Alternative Response holds its monthly meeting at 1pm in the Department of Human Resources building's room 1044 at 311 West Saratoga Street in Baltimore.
• On Wednesday, June 12th, Board of Public Works has a general meeting at 1pm in the Governor's Reception Room on the second floor of the State House in Annapolis.
• Also on Wednesday, the Maryland Community Health Resources Commission hosts another public forum with the Maryland Health Benefit Exchange and the Department of Health and Mental Hygiene for safety net providers, MCOs, and commercial carriers from 10am to noon at the Howard County Health Department at 7180 Columbia Gateway Drive in Columbia.
• On Thursday, June 13th, the Maryland Health Insurance Plan Board of Directors meets at 9am in 1 Calvert Plaza's suite 630 at 201  E. Baltimore Street in Baltimore.
• Also on Thursday at 9am, the Interagency Committee on School Construction holds its regular meeting in Conference Room 1 on the 8th floor of the Grasmick Education Building at 200 W. Baltimore Street in Baltimore.

Economic growth in Maryland is about average

US Bur. of Economic Analysis

The US Department of Commerce has released state-by-state data for gross domestic product in 2012. Maryland's GDP grew 2.4 percent for the year, ranking 15th among the states, and posting the fastest growth in Maryland's region. The US average was 2.5 percent - essentially equal to Maryland's growth rate. (For those keeping track of bragging rights, Maryland's growth rate exceeded Delaware's, D.C.'s, Pennsylvania's, and Virginia's).

Although it is good to record an increase, these rates are well below the GDP increases that accompany a normal economic recovery.

The sectors that contributed most to Maryland's GDP growth were real estate, and finance and insurance, followed by government.

GDP is the broadest of the traditional economic indicators. It measures the final value of all goods and services produced. GDP is criticized because it measures only outputs that can be measured in the market.It does not factor in costs and benefits related to things like environmental quality, crime, and social cohesion. Maryland is on of a growing number of states and countries using a "genuine progress indicator" to supplement GDP as a more comprehensive measure of overall well-being.

Week Ahead

Last week we blogged about the effects so far of sequestration on the state and its budget. Also last week, the League of American Cyclists named Maryland the 11th most bike friendly state, and Entrepreneur called Maryland the best state to start a business. 

This week's activity involves many meetings on health finance.

For the week of June 3rd through June 9th:

• On Monday, June 3rd, the task force to study the laws and policies relating to representation of indigent criminal defendants by the Office of the Public Defender will provide updates on the subcommittee's progress at 1pm in Room 100 of the House Office Building in Annapolis.
• On Tuesday, June 4^th, the State Advisory Council on Hereditary and Congenital Disorders meets from 6pm to 8pm in Room L-1 of the O’Connor Building in Baltimore.

• On Wednesday, June 5th, the Maryland Underground Facilities Damage Prevention Authority meets at 9am in the Lower Level Conference Room at One Call Center on 7223 Parkway Drive in Hannover.

• Later on Wednesday, the Health Services Cost Review Committee has its monthly meeting at 1pm in Room 100 at 4160 Patterson Avenue in Baltimore.

• On Thursday, June 6th, the Senate Budget and Taxation Committee’s joint briefing with the Senate Finance Committee to discuss recent proceedings of the Health Services Cost Review Commission begins at 9am at 3 West in the Miller Senate Office Building in Annapolis.

• Also on Thursday, the Vehicle Theft Prevention Council meets at 10am to discuss and vote on grant applications for fiscal year 2014 in Room 259 at the Loyola College Graduate Center on 8890 McGaw Road in Columbia.

• Also at 10am on Thursday, the Maryland Community Health Resources Commission, the Maryland Health Benefit Exchange, and the Department of Health and Mental Hygiene host a forum for regional safety net providers, MCOs, and commercial carriers in the Militia Room of the Waldorf Jaycees Community Center at 3090 Crain Highway in Waldorf.

• Later on Thursday, the Legislative Policy Committee will hold a briefing by the Maryland Joint Prison Task Force and the Department of Public Safety and Correctional Services regarding public safety and the Baltimore City Detention Center at 1pm in the Joint Hearing Room of the Legislative Services Building at 90 State Circle in Annapolis.
• On Friday, June 7th, the Bureau of Labor Statistics will release its national employment figures for May.

Sequester Update

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Three months into sequestration, effects have started surfacing from the first round of remarkable and random federal cuts to discretionary outlays. According to a poll this week by ABC New/Washington Post, the sequester now directly affects the lives of almost forty percent of Americans to some degree, and half of those affected claim substantial personal injury from this $85 billion slash in spending.  How this expenditure reduction will specifically affect Maryland’s residents remains uncertain, but a report released Wednesday by the Economic Policy Institute (EPI) that analyzes the net change to states’ federal grants sheds some light on possible consequences for the state’s budget.

According to the issue brief, while sequestration reduced total federal grants to states by $5.1 billion overall in 2013, Maryland fared better than average, receiving a $44 million increase in its federal aid (which represents a 0.5 percent increase relative to the 2012 funding level). The report provides state residents some reason for optimism, but this analysis does not suggest that Maryland as a whole has dodged the fiscal bullet. While the net effect on federal aid to the state may show an increase, some support for programs such as housing assistance, Meals on Wheels, and Head Start has waned. The state has also seen a $3.4 million decrease in federal support to administer unemployment insurance, according to a study by Pew. Many nonprofits in the state face grant reductions, with some shedding staff as a result; others yet to be hurt by the sequester see their own cuts looming next year. Additionally, a full seven percent of Maryland’s workforce is employed by the federal government, and many major agencies have issued furlough orders.  The economic effects of these lost wages will inevitably ripple through the economy.

Results for other states were mixed. Virginia likewise saw its grants grow (up $271 million, or 2.7 percent from last year), while others in the region like the District of Columbia, Pennsylvania, and Delaware suffered millions of dollars in federal revenue losses. EPI attributes the difference in states' outcomes to the mechanics of the sequester— it only reduces spending on discretionary programs, so states with increases in beneficiaries under mandatory spending formulas saw grants expand amidst this great spending contraction. Overall, 25 states experienced reductions in federal grant funding that will decrease their ability to provide public goods such as infrastructure, education, and social services for elderly and low-income residents.

Sequestration and its effects are far from over, as Evan Soltas of Bloomberg News points out in his blog post this week, reminding Americans that another $92 billion in cuts await us in 2014, and a portion of the spending reductions from this year have yet to go into effect.  

Week Ahead (Memorial Day Edition)

Last week was slow at MBTPI. Here's a look at the week ahead.

For the week of May 27th to June 2nd:

• On Tuesday, May 27^th, the Alcoholic Beverages Article Review Committee meets at 5pm in the Judicial Training room at 2009F Commerce Park Drive, Annapolis.

• On Wednesday, May 28^th, the Board of Public Works will meet at 10am in the Governor’s Reception Room at the State House, Annapolis.

• Additionally on Wednesday, the Bureau of Labor Statistics (BLS) will release its April report on Metropolitan Area Employment at 10am.

• Later on Wednesday, May 29^th, the Health Care Delivery and Financing Joint Committee will convene to discuss the Medicare Waiver at 1pm in Room 240 of the House Office Building on 6 Bladen Street, Annapolis.