Why this state wants to give you $40,000 to pay off your student loan
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Maine lawmakers want to help you pay off your student debt — and buy a house — while attracting more young people to the state to solve its labor shortage problem.
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Under the proposed “Smart Buying Program,” eligible first-time home buyers will be allowed to buy a home in the state and get up to $40,000 in student debt forgiven with a credit from the state. state, according to the Maine State Housing Authority.
Here’s the catch: you’d be required to maintain the house as your primary residence for at least five years. The student debt would be canceled at the time of the home loan closing, but you would still be obligated by a promissory note equal to the amount of student debt to be canceled. The student debt would then be canceled at 20% per year over five years, until you fulfill the five-year obligation.
If you leave or sell the house before the end of the five-year period, you will be liable for the proportionate amount of the second outstanding loan.
“We’ll help you pay off your college debt, but you’re going to commit to living in the state for five years,” Maine Senate Speaker Troy Jackson told Business Insider.
The Maine program is modeled on similar programs in Maryland and Illinois. It’s designed to not only help people pay off student debt and buy a home in a housing market where prices have risen by double digits, but also help Maine attract more workers.
The state has “a real challenge filling the job market,” Jackson said. That’s partly because Maine attracts more retirees than young workers. The combination of student debt relief and access to home buying could be the right tonic to attract more young people to the state, Jackson added.
Find out: Will student loans get more expensive when the Fed raises interest rates?
Read more: 10 ways to pay off your student loans in a year
Participants in Maine’s Smart Buy program must have a student debt balance between $5,000 and $40,000, Business Insider noted. You must also have a minimum credit score of 640 to qualify, and your home purchase must be valued between $86,600 and $131,100, depending on your family size and location.
The bill is still under discussion in the Maine Senate, which sits until April.
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