Maine weighs college loan relief for first-time homebuyers

Maine weighs college loan relief for first-time homebuyers

March 2, 2022 0 By Christian Wade

First-time homebuyers in Maine could be getting a break on their college debt under a proposal being considered by the Legislature, which would forgive up to $40,000 in outstanding loans.

The proposal, if approved, would provide income-qualifying first-time homebuyers the opportunity to purchase a home using Maine Housing’s First Home Loan program while also receiving student debt forgiveness of up to $40,000 total over five years. The bill would provide one-time startup funds of $10 million to implement the plan.

Senate President Troy Jackson, D-Allagash, has thrown his support behind the plan. During Tuesday’s hearing on the bill before the Legislature’s Committee on Innovation, Development, Economic Advancement and Business, he said the lack of access to affordable housing in Maine has reached a “crisis point” with long-term implications for the state’s economy.

“The cost of purchasing a home makes it more difficult for young people, who may have left Maine to continue their education or pursue a job, from returning home to live, work, raise their family and eventually retire,” Jackson told panel members. “Add in student debt … and it makes the idea of our young people returning to Maine almost impossible.”

He said the state has an opportunity to attract and retain young people by supporting a program that increases homeownership and provides much-needed student debt relief.

“We’re counting on our young people to fill workforce shortages, keep our heritage and industries going and need our state into the future,” Jackson told the committee.

In December, the Maine State Housing Authority released a report with the Finance Authority of Maine outlining the potential scope and design for the new homeownership and debt reduction program.

Erik Jorgensen, the authority’s director of government relations and communications, said he has no doubt that the program would improve the lives of “those people who are fortunate enough to participate in it,” but warned it could become a drain on the state’s budget.

Given the large amount of student debt held by Maine borrowers, he said demand for participation in the program would likely be “in excess of available funding.”

“This program would provide a substantial publicly-funded benefit in the form of debt relief and would require significant ongoing support from the state in order to continue to operate after the pilot period,” Jorgensen said in testimony. “It is not something that either MaineHousing or FAME would have the capacity to self-fund.”

Maine’s public colleges aren’t taking a position on the bill, but point out that college can be affordable – even debt-free – for some students if there is enough financial support from the state.

“The best way to reduce college debt so graduates are not held back from participating fully in the economy – including through purchase of a home – is to ensure postsecondary education is affordable, and that students can stay on-track to timely degree completion,” Samantha Warren, director of government relations for Maine’s University System, told the panel Tuesday.

If the committee recommends the bill’s approval, it would still need to pass the House and Senate before heading to Gov. Janet Mills’ desk for consideration.

This article was originally posted on Maine weighs college loan relief for first-time homebuyers