3 new loan programs should provide more HOPE

It’s an interesting idea —- one at the core of the HOPE scholarship launched by former Gov. Zell Miller. The idea is that if youngsters know early enough that money need not be a barrier to a college education, they’ll study harder and focus earlier. HOPE said to Georgians that if you take education seriously and maintain a B average, on graduation from high school a stipend will be provided to cover tuition, most fees and some books at public colleges and up to $1,750 at private institutions.

Still, half the students graduating from public and private not-for-profit colleges in Georgia in 2007 had education-related debt averaging $16,628, according to The Project on Student Debt.

While listening five years ago to legislators debate how to keep HOPE solvent long-term, Atlanta attorney Les Schneider concluded that something more was needed for students trying to afford college. An idea sprang from coincidental conversations with an unnamed truck driver and with Harry C. Payne, who at his death earlier this year was president of Woodward Academy in College Park.

The result four years later is a law sponsored by state Sens. Bill Hamrick (R-Carrollton) and Seth Harp (R-Midland), among others, creating a series of three low-interest loan programs. Rates start at 1 percent.

The first is a “loan of last resort” of up to $10,000 per year for up to four years to be made available to students who want to attend college, but who fall just below HOPE eligibility. The intent is to make certain that money is not a barrier to college for the determined.

The second, called “graduate on time” loans, require no specific grade average and offer incentive to get in and get out. At present, 54 percent of full-time students fail to graduate within six years. Taxpayers, who finance the bulk of college costs, have an incentive to get them there and get them out. Starting interest rates are no more than prime, but if students graduate within four years with a cumulative grade point average of no lower than 2.0 —- a “C” average —- the rate converts retroactively to 1 percent.

The third is an “education for public service” loan program. As with the “graduate on time” program, the initial loan rate is no more than prime. The interest rate drops to 1 percent with employment by the state or by a local government or school system for a specified period of time.

There’s a catch, though. The loan programs have been authorized, but are not yet available. Each loan program is separate and each requires $500,000 in funding before the Georgia Student Finance Authority, which will manage the funds and accept contributions to them, can begin to make loans. Funds can come from donations from foundations, from tax-deductible gifts by taxpayers and from appropriations by the General Assembly.

When the idea of the loan programs was first pitched to Hamrick, then chairman of the Higher Education committee, “he thought it would be a great idea that could supplement what HOPE does and that we could get a reputation in Georgia of not letting money get in the way of getting an education,” said Schneider. “They could go to school, get through, get a degree and then pay it back.”

Another program that makes it possible for Georgians to voluntarily contribute to the education of others was also approved this year. A state income tax credit of up to $1,000 for individuals and up to $2,500 for couples is offered for gifts to organizations offering scholarships to children who enroll in private schools. Corporations can get credits for up to 75 percent of their state income tax liability. It, too, is just getting off the ground.

The tax credits can be no more than $50 million and the Department of Revenue has to confirm that credits are available under that cap —- so there’s no way to get credit for 2008 contributions. There’s certainly room under the cap this year, but no time to get approval.

“I am thrilled with the success” of the program so far, said state Rep. Earl Ehrhart (R-Powder Springs), chairman of the rules committee and a major promoter of the legislation, which was written by state Rep. David Casas (R-Lilburn), a public school teacher.

Two programs, both good, allow Georgians to decide where to put their money in education. Time’s running out now, but in the New Year, they’re good investments.

> Jim Wooten is associate editorial page editor.

jwooten@ajc.com