Maine mulls $42 million plan to ease college graduate debt
As a lifelong learner, Jason Judd already has three degrees under his belt, and he’s not done yet.
That makes sense to the head of Educate Maine, a Portland nonprofit that champions workforce education. But the degrees from the University of Maine, University of Southern Maine and Northeastern University that advanced Judd’s career also left him saddled with college debt.
“When it comes to college, I’ve always made practical choices, looking for great value as well as a great education,” the 40-year-old Lewiston resident said. “I worked several jobs while in college and got lots of scholarships, but I still pay thousands of dollars in student loans every year.”
That could soon change. Under a proposed revamp of the Maine Opportunity Tax Credit program, recent college graduates who live and work in Maine would be eligible for up to $2,000 a year in college debt relief. The lifetime benefit would be capped at $25,000.
According to the US Department of Education, the average Maine graduate owes $33,000 in loans. It’s the lowest level of debt in New England, but carried by those who can least afford to pay it – Maine college graduates earn $38,000 a year, or $5,000 of less than the New England average.
This month, in her State of the State address, Governor Janet Mills announced that she wanted to simplify and expand the state’s existing college debt relief program, which was aimed at science, technology and math graduates, and offer it to all recent graduates who live and work in Maine.
“School debt is a heavy burden that prevents young people from starting a business, affording a mortgage or paying their bills and reaching their full potential,” Mills said in his remarks. “It is simply unacceptable.”
This $42.1 million overhaul would expand eligibility to any recent graduate with student debt, regardless of what type of degree they earned, where they earned it, or what type of job they do now, as long as he has a job and makes Maine his home, Mills says.
Under these new terms, an additional 40,000 people would be eligible to benefit from the revamped Opportunity Maine program, officials estimate. The old program, with its STEM focus and binding rules, had helped about 20,000 people repay their school loans.
Graduates would claim the benefit by itemizing student loan payments on their annual tax returns. A dollar-for-dollar refundable tax credit would be applied to any tax debt they have, with the remainder issued as part of the graduate’s annual refund check.
Any existing or new full-time resident of Maine would be eligible. Participants must have completed an associate’s, bachelor’s, master’s or doctoral degree since 2007 and be working at least part-time, meaning working at least 936 hours per year and earning $12,000.
She noted the bipartisan beginnings of the proposal. Sen. Matt Pouliot, R-Augusta, has sponsored a college debt relief bill, LD 798, pending before the tax committee. The committee voted in favor of the bill, but is awaiting the formal cost estimate needed for consideration by the full Legislative Assembly.
The Mills plan would cap the annual benefit at $2,000, which is slightly lower than the average annual benefit of $2,100 given under the existing program, at a total cost of $42.1 million. Pouliot wanted to cap the annual reimbursement at $2,500.
Under Mills’ proposal, Maine would repay Judd half of the $4,000 he pays each year to pay off loans he took out to pay for his graduate degree from USM and his doctorate from Northeastern. He is still paying off his bachelor’s degree, but that debt is too old to be covered by Mills’ plan.
Take advantage of financial freedom
Some of his friends and colleagues who take advantage of the scheme would likely use the financial freedom it gives them to buy their first home or start a family, but Judd said he’ll likely use the benefit to pay off college debt in five years. . instead of 10.
“Financial independence would be its own reward,” Judd said. “Also, with my job, I was always expected to continue my studies, and I had decided that I was not going to go into debt anymore until I had paid off what I had. It would free me to do it in the future, if needed.
But the professional benefits of an aggressive college debt relief program could overshadow the personal benefits, Judd said. The program would give Maine employers, including Judd, a powerful recruiting tool when prospecting for future employees.
“Retired student debt is a critical workforce development strategy,” Judd said. “It’s a great way to keep our young people in Maine and recruit new people to come to Maine, and we need it if we’re going to stay competitive as a state and meet our labor needs. projected work. “
Analysts at the Maine Center for Economic Policy, a nonpartisan research and policy organization, said there was much to celebrate about the proposal, but they would like to maximize the impact by reinstating the annual cap of 2,500. $ de Pouliot and reducing the income requirement by $12,000 per year.
“I think it’s a really good expansion and simplification of a program that didn’t work,” said analyst Arthur Phillips. “It’s exciting, but there’s still a lot to do, like making college affordable from the start and improving the child care system, the workforce behind the workforce.
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