March 23 – The state Senate voted 20 to 13 on Tuesday in favor of a program that would forgive up to $40,000 in student loan debt for some first-time home buyers.
MaineHousing’s $10 million Maine Smart Buy program would be available to qualified first income buyers who agree to live in the home for at least five years. Eligibility is open to students in all fields of study, and graduation is not required to apply.
“Too many of our young people who have worked hard to pursue their chosen professions – professions we desperately need – are struggling with high levels of student debt,” said Sen. Chip Curry, D-Waldo . “It prevents them from buying their first home and often forces them to leave Maine.”
The loan program that would be created by LD 1978 was the result of a legislative resolution that directed MaineHousing to create a program that would help prevent young Maine residents from leaving the state upon graduation. It’s based on a Maryland program so successful it’s been reauthorized twice, Waldo said.
In Maine, the average student graduates with student debt of $33,500. This debt cripples more than 178,000 Maine residents, or 13.3% of the state’s population. And that makes it nearly impossible to buy a home in Maine, where the statewide median selling price hit $299,000 in December.
The bill has the support of legislative leaders such as Senate Speaker Troy Jackson, D-Allagash.
“The student debt situation is dire,” Jackson said during testimony in support of the bill last month before the Joint Standing Committee on Innovation, Development, Economic Advancement and Business. “With student loans, car payments, rent, utilities and other basic expenses, it’s hard enough to make ends meet, let alone buy a home.”
Despite Jackson’s support, the bill only narrowly won committee approval in a 7-6 vote this month.
“We rely on young people to fill labor shortages, maintain our heritage industries and lead our state into the future,” Jackson said. “Through this program, we can make it easier for young people to create a meaningful and fulfilling life here.”
Sen. Matt Pouliot, R-Augusta, spoke out against the bill on Tuesday even though he is a realtor and sponsored a separate bill approved by the Senate earlier in the day that would overhaul the tax credit for Maine Opportunities to help reduce Mainers’ student loan debt.
“You would think I would strongly support that,” Pouliot said. “I think the intent behind it or the idea is really good: to help people in Maine get into homes, especially those with student loan debt. But the reality is that we have a financial problem. offer in this state.”
Pouliot said Maine would be better off using the $10 million earmarked for this program to fund initiatives that would help build more homes for all Mainers, such as those to recruit young people to enter the building trades, for example.
MaineHousing is also concerned about money – how much is available, not how it should be spent.
The demand for the debt cancellation program could far exceed the $10 million in funding available, especially given the high indebtedness of today’s college graduates. The bill could lead to giving a substantial public benefit to a small group of households, a MaineHousing lobbyist told the innovation committee.
The bill now heads to the House for consideration.