Debt Relief

Senate approves faculty debt aid for first-time homebuyers

The state Senate voted 20-13 Tuesday in favor of a program that will forgive as much as $40,000 in scholar mortgage debt for some first-time dwelling patrons.

The $10 million Maine Good Purchase program from MaineHousing can be accessible to income-qualified first-time patrons who conform to reside within the dwelling for a minimum of 5 years. Eligibility is open to college students in any discipline of research, and commencement just isn’t required to use.

“Too lots of our younger individuals who have labored arduous to pursue their chosen occupation – professions we desperately want – are saddled with excessive ranges of scholar debt,” mentioned Sen. Chip Curry, D-Waldo. “This prevents them from buying their first properties and sometimes forces them to depart Maine.”

The mortgage program that will be created by L.D. 1978 is the results of a legislative resolve that tasked MaineHousing with constructing a program that will assist preserve younger Maine residents from leaving the state upon commencement. It’s based mostly on a Maryland program so profitable it has been reauthorized twice, Waldo mentioned.

In Maine, the typical scholar graduates with $33,500 in scholar debt. This debt is crippling over 178,000 Maine residents, or 13.3 p.c of the state inhabitants. And it makes it nearly unimaginable to purchase a house in Maine, the place the statewide median gross sales value hit $299,000 in December.

The invoice enjoys the assist of legislative leaders resembling Senate President Troy Jackson, D-Allagash.

“The scenario with scholar debt is dire,” Jackson mentioned when testifying in favor of the invoice final month earlier than the Joint Standing Committee on Innovation, Improvement, Financial Development and Enterprise. “With scholar loans, automotive funds, lease, utilities and different fundamental bills, it’s arduous sufficient to make ends meet, not to mention buy a house.”

Regardless of Jackson’s assist, the invoice solely narrowly gained committee approval on a 7-6 vote this month.

“We’re relying on younger folks to fill workforce shortages, preserve our heritage industries going and lead our state into the long run,” Jackson mentioned. “With this program, we are able to make it simpler for younger folks to create a significant and fulfilling life right here.”

Sen. Matt Pouliot, R-Augusta, spoke in opposition to the invoice Tuesday although he’s a realtor and sponsored a separate invoice accepted by the Senate earlier within the day that will overhaul the Maine Alternative Tax Credit score to assist scale back scholar mortgage debt for Mainers.

“You’d assume I’d be in sturdy assist of this,” Pouliot mentioned. “I believe the intent behind this or the concept is a very good one: to assist Maine folks get into properties, notably those that have scholar mortgage debt. However the actuality is that we now have a provide side-issue on this state.”

Pouliot mentioned Maine can be higher off utilizing the $10 million earmarked for this program to fund initiatives that will assist construct extra housing for all Mainers, resembling these to recruit younger folks to enter the constructing trades, for instance.

MaineHousing is frightened about cash, too – about how a lot is accessible, not the way it needs to be spent.

Demand for the debt-forgiveness program may far exceed the $10 million in accessible funding, particularly given the big debt load carried by as we speak’s faculty graduates. The invoice may result in giving a considerable public profit to a small group of households, a MaineHousing lobbyist informed the innovation committee.

The invoice now heads to the Home for consideration.

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