Pennsylvania’s student debt has Sen. Bob Casey pushing for change

As Senate Democrats look to resurrect some of their most-ambitious student-debt relief ideas from recent years, Sen. Bob Casey has joined the push and says he’s finding the message welcomed in his home state.

That may be because Casey is the senior senator from Pennsylvania, where thousands of graduates have an average student debt higher than their peers in almost every other state. And Pennsylvania is home to the nation’s two most expensive public universities.

Casey joined a group of 27 Democrats in Congress on Tuesday in introducing legislation that would allow graduates to pay less interest on loans through refinancing and would increase some federal student aid money through Pell Grants. The bill, called the “In the Red Act,” also would make community college free in participating states.

The legislation comprises three bills previously introduced in the Senate that so far have failed to get bipartisan support. To pass it, Democrats will need to win over some Republicans.

Casey said the legislation was a step forward but no “magic wand” to fix student debt, which could have a ripple effect on the economy.

“If you have a lot of student debt, you’re not going to buy a house. . . . You’re not going to invest,” he said.

Pennsylvania ranks third in the country – behind Delaware and New Hampshire– as a “high-debt” state, where nearly 3 out of 4 college graduates leave school owing money on student loans, according to the Institute for College Access and Success’ data for 2014 graduates.

On average, Pennsylvania graduates owe more than $33,000, the institute’s “Project on Student Debt” shows. Nationally, the average for 2014 graduates was $28,950.

Middle-class families, Casey said, are especially hurt by rising college tuition costs and students saddled with debt after graduation.

“It’s a reality for a lot of people,” he said, noting the $30,000-plus in student loans he paid for his undergraduate and law degrees. And since he graduated in the 1980s, the cost of an education has skyrocketed, he said.

The U.S. Department of Education estimates that student loan debt has more than doubled in the past decade, with 41 million people nationwide owing more than $1.2 trillion – more than total credit card debt in the country.

Although Pennsylvania’s students have higher-than-average debt, U.S. Department of Education statistics show that most of the state’s public-college graduates fare better than average in paying back their loans after school.

The federal education agency tracks student loan repayment and considers a borrower in default if no payment is made for nine months. Defaulting can hurt a graduate’s credit rating or chances of getting more student loans, and the government can garnish wages or income tax refunds.

Pennsylvania’s two most expensive public universities – Penn State and the University of Pittsburgh – boast student loan default rates well below the national average and much lower than the default rate of students from private or for-profit schools, federal data shows.

At Pitt, less than 5 percent of recent graduates defaulted on student loans in the first three years their loan payments began. Penn State’s default rate is 5.7 percent, according to the most recent data from the U.S. Department of Education, published last year. The national average is 11.8 percent.

Higher ed advocate: Bill strong but unlikely to pass

Democratic Party leaders have floated major student-debt bills in recent years without gaining much traction in Congress. Republican members have shown support, though, for ideas such as simplifying the federal student aid application, called FAFSA, and have agreed to short-term extensions of federal loan programs.

Congress is due to consider a reauthorization of the Higher Education Act, the law that governs federal student aid and funding for public universities, but that isn’t likely to happen this year, said Megan McClean Coval. She’s a lobbyist with the National Association of Student Financial Aid Administrators.

Some bills have been proposed in an attempt to address student debt until Congress reauthorizes the act, Coval said, adding that that keeps student debt in the national conversation.

The legislation introduced Tuesday, she said, has “strong ideas” to reduce student debt.

Still, Coval suspects that Casey and other Senate Democrats will have a hard sell to pass major revisions this year. Even if some Republicans support the idea, she said, Congress is plagued by presidential election-year inaction.

Resolving the student debt crisis, Casey said, has the potential to be a bipartisan issue, though Democrats may need to compromise with Republicans on how to pay for the changes to federal programs.

Democrats want to fund their proposals by ending some tax breaks related to corporations that give executives performance-based bonuses, by requiring anyone who earns $1 million or more annually to pay at least a 30 percent income tax rate and by reducing tax subsidies given to major oil companies such as BP and Exxon.

Casey has also recently introduced a bill to help students qualify for financial aid even if they’ve been convicted of drug offenses. That bill, he said this week, has a Republican co-sponsor and may be more likely to pass than sweeping change to the Higher Education Act.

Casey’s bill with Sen. Orrin Hatch, R-Utah, would remove questions from the FAFSA about prior drug charges and would repeal part of the Higher Education Act that takes away federal financial aid from college students who have been convicted of drug crimes.

This story was originally published March 16, 2016 at 2:57 PM with the headline "Pennsylvania’s student debt has Sen. Bob Casey pushing for change."