Maine wants to pay off $40,000 in student loans if you buy a house
- A proposal in Maine would award student loans of up to $40,000 to first-time homebuyers.
- The Maine Senate President said he could help the labor shortage by hiring younger workers.
- The offer could come about as the federal government continues to await broad relief for borrowers.
In today’s economy there are quite a lot of people who would like to buy a house, a a lot of student debtand a whole host of companies struggling to find workers.
The Maine legislature is considering eliminating all of these challenges in one fell swoop. They want to lure young people to Maine by forgiving themselves $40,000 in student loan debt for first-time homebuyers.
Maine Senate President Troy Jackson told Insider that Maine has “a real challenge filling the job market.” It’s become more of a retirement state, he said, without many prime-age workers. At the same time, these younger workers may not be able to make a down payment on a first home or may not have the financial records of a more experienced buyer.
The legislation would require buyers to use their new homes as their primary residence for at least five years.
“A lot of people are trapped in debt. I strongly believe that was intentional,” Jackson said.
It’s a potential debt-reduction solution that might discourage workers from taking the plunge to pursue a dream job, buy a home, or move to a new state. It can also help address the ongoing problems employers say they face when hiring new workers.
“The housing market has exploded. This is pandemic for Maine, and our Maine wage system is not currently sized for the housing market,” Jackson said. “People talk about the American Dream, and people talk about how they used to be able to do it. Nobody has seen this before.”
How it works
The Maine Smart Buy program would help first-time home buyers in Maine with outstanding student debt gain home ownership Legislative Maine called.
The program is similar to Illinois’ Smart Buy program. Participants must have a student debt balance of between $5,000 and $40,000, and they would work with the state of Maine to pay off their student debt in full by the time the house closes. If the buyer sells the home within five years of purchase, some of the student loan assistance must be repaid to the state.
“We’ll help you pay off your college debts, but you’ll commit to living in the state for five years,” Jackson said.
Entrants must have a minimum credit rating of 640 to be eligible and their home purchases must be between $86,600 and $131,100 depending on family size and location. The bill is scheduled for further working sessions, and the Maine Senate is at the meeting until April.
“I think that should be a priority for all of us,” Jackson said. “Now I would hope that the business community, which shapes the mindset of many of my colleagues, will get involved by asking the state to do something to bring workers to Maine.”
$1.7 trillion in student loans weighs heavily on Americans
the $1.7 trillion The student debt crisis that weighs on the shoulders of 45 million Americans is growing every day, and for many of those affected, the burden of debt is preventing them from buying a home. The Institute for University Access and Success Rank Maine as a highly indebted state, with 2020 graduates averaging $32,764 in debt.
“If you went to school here in Maine to be a professional social worker, you’re going to be paying your college debt for a hell of a long time because you’re not making a lot of money,” Jackson said. “But this is a very valuable profession and you should not be trapped in it. We need all kinds of jobs.”
The National Association of Realtors found in a September survey that student debt was causing 51% of borrowers to delay their home purchases — a problem Home Affairs Secretary Marcia Fudge highlighted in July.
Fudge said at the time that there was a disproportionate rate of black homeownership and that student debt also weighed disproportionately on black borrowers.
“Who has student debt? Poor people, blacks, browns,” Fudge said axios. “We are the people who bear the most debt. And that’s why the system is already skewed in that we’re not creditworthy.”
It’s unclear how many people will take advantage of these programs and whether they will ease the debt burden of millions of Americans. President Joe Biden has taken steps to respond to the crisis by forgiving debt to certain groups of borrowers, such as those who have been swindled by for-profit schools. But when it comes to broad relief for every federal borrower, he has been largely silent and faces pressure from his own party to implement that relief before student loan payments resume on May 1.
“I wish the federal government would do more for people who are already trapped in this. Unfortunately, as a state, we will not be able to solve everyone’s problem. I’d love to do it,” Jackson said. “Right now I’m trying to make sure people can come into the state or stay in the state. This is one way to do that.”