By Cliff Ginn and Rob Brown

With so much attention on health care, few have noticed that Congress just passed crucial legislation to expand educational opportunity.

Increasing access to higher education and training is the best way to prepare Americans with the knowledge and skills that the 21st century economy demands. Raising the proportion of degree holders in our work force is the best way to grow our economy. For individuals, every new level of educational attainment — from occupational certificate to associate degree to bachelor’s degree and beyond — translates into higher wages and lower likelihood of unemployment.

Unfortunately, the cost of higher education and training prevents many people from pursuing further education and training after high school. This is especially true in low-income, rural states such as Maine. Making college more affordable can help more people get over that financial hump, and will give our economy and businesses the skilled work force they need to thrive.

Over this last week, both houses of Congress passed a budget reconciliation bill that will make college much more affordable for Mainers and for the rest of the nation. It will increase the amount of Pell grants, which reduce the cost of college, and then effectively lower interest rates on the student loans that people use to cover the remaining costs. The bill will also reduce loan payments for people who have low incomes — a crucial protection at a time when student debt is at all-time highs and unemployment is widespread.

The bill accomplishes these things by eliminating the wasteful subsidized loan program, and replacing those loans with an expansion of the federal direct lending program. Under the subsidized loan program, the federal government provides billions of dollars in subsidies to private lenders to originate student loans, and then guarantees repayment of up to 97 percent. In the 1990s, the federal government established a direct lending program, which was able to make loans available much less expensively. Every $100 of loan costs the government $13.81 under the subsidized loan program, but only $3.85 under the direct lending program.

Moving from a mix of subsidized and direct lending to exclusively direct lending frees up $61 billion per year. $36 billion of that would go into increasing Pell grants in a way that keeps up with inflation. Without this infusion, Pell grants would have to be cut substantially, and 500,000 students would lose their grants, because so many people have chosen to go back to school during the recession; $1.5 billion would go to cap student loan payments at 10 percent of income. At a time when Mainers’ average student debt loads have risen to $25,000, this provides much-needed economic security for people taking on the risk of student debt to pursue higher education and training.

Tens of thousands of Mainers rely on Pell grants and student loans, and these sweeping federal changes will magnify Maine’s impressive efforts in making college affordable. The Opportunity Maine Program, a state income tax credit that effectively wipes out student debt for Maine college graduates, is the nation’s boldest universal higher education guarantee. The Competitive Skills Scholarship Program invests in helping low-income workers to finish a degree, certification, apprenticeship or on-the-job training program in high-wage, high-demand fields. The Parents as Scholars program helps public assistance recipients pursue higher education.

With the federal government stepping up to make college more financially accessible, now is the time for Maine to redouble its efforts to catch up with the rest of New England in educational attainment. Studies have shown that we have the lowest incomes in New England because we have the lowest proportion of degree holders in our work force. Our state agencies, high schools and colleges need to tell students — over and over and over again — that no matter what their life circumstances, they can build better lives through higher education. The Opportunity Maine, Competitive Skills Scholarship and Parents as Scholars programs will work only if Maine residents know about them.

If we drive this message home with our young people and help our many displaced workers pursue higher education and training, we can emerge from this recession more prosperous than we entered it.

Cliff Ginn and Rob Brown are co-directors of Opportunity Maine.

By Cliff Ginn
Sun Journal, Mar 21, 2010

Recently, Gov. John Baldacci and Democratic legislative leaders unveiled two bond packages to promote job creation. These proposals move in the right direction, but should go further.

In a recession, consumer spending and business investment plummet, leading to massive job losses. In the short term, those jobs can be replaced if public investment increases, through borrowing or through raising revenue in ways that do not further depress private spending and investment. If the public investments have high rates of return, they also make the economy more productive once it recovers.

The two bond proposals rightly emphasize high-return investments in energy efficiency, transportation and public infrastructure. A closer look at the benefits of energy investment shows how bonding can strengthen an economy over the long term.

Energy efficiency represents one of Maine’s best economic development opportunities. Most buildings, from homes to industrial facilities, could reduce energy consumption by more than 30 percent. Efficiency costs less than one-third as much as generated energy, and if Maine made every building 30 percent more efficient over the next decade, there would be savings of $8 billion to $10 billion during two decades and 10,000 jobs created.

Unfortunately, numerous market barriers prevent residents and businesses from investing in efficiency. That’s why public grants, loans and technical assistance are essential to build the new energy economy.

The bond proposals take modest steps toward realizing the possibilities in Maine’s energy future. The legislative proposal emphasizes efficiency in schools, colleges and universities, reducing governmental and educational costs while creating good-paying jobs.

The governor focuses on industrial efficiency grants, creating jobs while keeping our manufacturers competitive. The governor also rightly prioritizes further research and development investment to make Maine a center for wind turbine component manufacturing. The benefits of harvesting Maine’s wind resources will be comparatively modest if Maine cannot leverage those resources to create good-paying manufacturing jobs.

Unfortunately, neither bond helps Maine’s residents invest in efficiency.

Opportunity Maine is a partner in a federal stimulus-funded project in Penobscot and Piscataquis counties to replace old mobile homes with small, efficient homes. This project will provide safer homes for some of Maine’s poorest residents and help them make ends meet, save money and spend more in the local economy, while creating good-paying building trades jobs and on-the-job training opportunities.

A bond issue could bring this economic, work force and community development model to other job-starved areas in rural Maine.

The proposals should embrace other policies to spur efficiency investment and job creation.

Raising efficiency standards for existing public and higher education buildings would prompt public colleges and local and county governments to hire energy service companies (ESCOs) to make efficiency improvements. These companies can provide financing, and a performance-based contract can ensure that the ESCO only gets paid if energy savings occur.

Public entities could receive technical assistance from the Efficiency Maine Trust to ensure that taxpayers get a good deal. The end result would be significant taxpayer savings, injection of more private capital into the economy and thousands of jobs created.

The governor and the Legislature should also ensure that public funds create jobs for Maine people, not out-of-staters. There should be a much stronger contracting preference for in-state workers, and in counties with high unemployment, the state should require best efforts to hire within the county where work is being done. Contractors should be required to coordinate with on-the-job training programs and make best efforts to hire from disadvantaged populations, including the long-time unemployed.

The state should also invest directly in our workforce, ideally by putting a one-time injection into Maine’s Competitive Skills Scholarship Fund. The fund helps low-income Mainers get education and skills training in high-wage, high-growth jobs. A recession is a perfect time to help laid-off workers earn certificates and degrees that will help them achieve self-sufficiency. Increasing our work force’s education and skill levels is the best way to strengthen our economy.

Ultimately, the 2,000 jobs that either bond package would create will make a difference, but Maine has lost more than 25,000 jobs since the recession began, and would have lost thousands more without the federal stimulus. Maine bonds less than almost any other state, and that positions us well to use bonding more aggressively now to create jobs and to pull Maine out of the recession with a stronger economy.

Unfortunately, Maine has done the opposite of what it should since the recession began, focusing on cutting public investment at a time when plummeting private investment was destroying thousands of jobs.

It’s time to get Maine’s economy back on track.

Clifford Ginn is co-director of Opportunity Maine in Portland, a nonprofit organization that promotes economic security and sustainable development through innovative investments in the education and skills of Maine’s work force.