A proposed bill in Maine would forgive $40,000 of student loan debt for first-time homebuyers.
Potential homeowners would receive a Maine State Housing Authority loan for a mortgage on their first home in addition to the student debt forgiveness.
The Maine Legislature held a public hearing on the proposal on Feb. 23, which included comments from the Maine State Housing Authority.
“Given the large quantities of student debt among college graduates today, the program would likely experience demand well in excess of available funding,” said Erik Jorgensen, the agency’s senior director of government relations.
The average college graduate in Maine leaves school with $33,000 of student loan debt. A study published by the National Association of Realtors in 2017 found that 40% of first-time home buyers have student loan debt and the debt prevents 52% of non-homeowners from qualifying for a mortgage.
Democrat State Senator Troy Jackson proposed the creation of government programs that help first-time home buyers. In 2021, he sponsored a bill that created the Maine Smart Buy program which “would offer a path to home ownership, combined with student debt reduction, for buyers who might otherwise be unable to purchase their first homes.”
Jackson also noted the programs could encourage young people to move to Maine.
Maine’s Department of Administrative and Financial Services predicted in 2018 that the portion of the population considered to be of working age (20 to 64) would decline 6% by 2026. The Department also noted that Maine has “the largest relative share of Baby Boomers” when compared to the rest of the country.
“Maine reached the point earlier this decade where the number of deaths each year is greater than the number of births,” the department noted in its report. “In this situation, the only way Maine’s population grows is through migration.”
The report noted that “population growth is an important element of economic growth. As the existing population ages out of the workforce, younger workers are needed to fill the job openings created through retirements.”
During the Feb. 22 hearing, Jackson noted the benefits of supporting first-time homeownership.
“If you were to come to Maine and actually buy a home, we would start paying down a portion of your student debt over a five-year period,” he said.
He added, “We need people to come to Maine to help be a part of our tax base, be part of the economy. And I think this is a great way to do it.”
The proposal would cost $10 million, which would be secured through Maine’s General Fund.