PROVIDENCE – A state incentive program aimed at luring college graduates to work in critical industries through student-loan reimbursement may be losing its luster.
Just more than 140 recent college graduates applied for the latest Wavemaker Fellowship program, which closed in August, according to Jennifer McGee, a spokesperson for R.I. Commerce Corp. That’s a 41% drop from 2021, which drew 245 applicants, 160 of whom were approved for the refundable tax credits.
Seifert Systems Invests in Energy Efficiency to Strengthen Operations
For manufacturers, energy is more than just another operating expense. It plays a critical role…
Learn More
The Commerce Wavemaker Fellowship Committee, which reviews and approves applications, has not yet made a decision on who among the latest round of applicants will be approved.
The drop in demand comes amid recently expanded parameters – and more funding – to include healthcare and mental health workers to the list of eligible recipients. The program, launched in 2016 under former Gov. Gina M. Raimondo, initially concentrated on science, technology, engineering and mathematics workers, offering refundable, annual tax credits of $1,000-$6,000 up to four years – with the amount awarded depending on the level of education completed. Lauded by lawmakers and employers as a solution to crippling student loan debt and worker shortages in growing industries, the program quickly picked up steam.
In its first year, in 2016, 308 people applied for grants, with 208 approved, for a 68% acceptance rate, PBN previously reported. Competition grew fiercer every year, with 28% of the 688 applicants approved in 2019.
Not this year. What gives?
McGee in an emailed statement chalked up the lower level of interest to federal student loan policies during the COVID-19 pandemic.
Indeed, federal student loan holders, as well as some who used private loans, didn’t have to pay interest or make monthly payments on their debt for most of the last two years.
Janet Raymond, senior vice president for the Greater Providence Chamber of Commerce and a member of Commerce’s Wavemaker committee, also pointed out that fewer people may have known about the program, since the state was unable to promote it through college campus events during the early parts of the pandemic.
“I think COVID had a lot to do with this,” Raymond said.
Karl Wadensten, an R.I. Commerce board member and CEO and president of VIBCO Inc., also wondered if lower college enrollment overall, particularly in challenging fields like engineering and science, was to blame. The supply chain management class he teaches at the University of Rhode Island has seen attendance drop from its usual 30 to 40 students, to just 21 this year, he said.
Sen. Ryan Pearson, D-Cumberland, who sponsored the original legislation to start the program as well as this year’s bill to expand eligibility, questioned whether the new types of workers even knew that they could apply. Although this year’s applications were open to mental health and health care workers, the program website does not list them among the eligible industries.
“There’s probably some stuff around the implementation side that might merit opening up the cohort [to new applicants] again,” Pearson said.
McGee and Raymond were optimistic interest would rebound, particularly after temporary suspension of student loan payments ends at the end of this year.
Gov. Daniel J. McKee’s office also painted a rosy picture when asked about the number of applications received.
“We are pleased with those that have already applied in this most recent round and we anticipate even more applications when the forbearance exemption officially ends,” Matthew Sheaff, a spokesperson for McKee, said in an email.
And President Biden’s recent announcement to cancel up to $10,000 of federal student loan debt for eligible borrowers doesn’t help everyone, or at least not enough, Raymond said.
She pointed to data from The Institute for College Access and Success, which studies student loan debt, showing that more than 4 in 10 Rhode Island college and university graduates had private student loan debt as of 2019, which doesn’t get the same forgiveness. The institute’s data also shows that most Rhode Island graduates have more than $10,000 in debt, with the $37,614 state average ranked the fourth-highest in the country as of 2019.
“If forgiveness became much more generous than that $10,000, than the state program might be less needed,” Pearson said. “As it stands now, we’ve still got a real issue in terms of helping people get beyond their student loans.
Still, Raymond wasn’t ruling out the possibility that the program has lost some of its relevance, though she said it was too early to draw any conclusions. The Commerce committee has asked for more data to better understand why there was a decline in applicants this year, she said.
Wadensten also suggested the program should be expanded to other fields, including accounting and supply chain management – both industries plagued by a lack of workers.
“It’s definitely something to be conscious about and think deeper on to find out the why,” he said.
Pearson’s original bill would have also let public school teachers in STEM fields benefit from the tax credits, although that was struck from the final version. He also suggested government workers as a group in need of student loan relief based on their average debt.
(Updates: Comment from Pearson added in 12th, 13th, 19th and 23rd paragraph. Fourth paragraph updated to clarify refundable tax credits offered up to four years.)
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
