Lawmakers in Maine are trying to attract younger workers by forgiving up to $40,000 in student loan debt to first-time homebuyers.
Maine Senate President Troy Jackson told Business Insider the Pine Tree state has a significant challenge filling its job market. Residents are getting older and retiring, while at the same time, younger workers may not have the funds for a down payment or the financial record of an experienced buyer.
“A lot of people are trapped in debt. I believe very strongly that was by design,” Jackson said.
According to a Maine State Housing Authority report, the top two reasons people are delaying buying a home are they’re unable to save enough for a down payment and they don’t feel financially secure enough due to existing loan debt.
The Maine Smart Buy Program would allow qualifying first-time homebuyers to purchase a home through the MaineHousing First Home Loan Program and receive forgiveness of up to $40,000.
The Maine Smart Buy program is designed after similar programs in Maryland and Illinois. To be eligible, participants must have a student debt balance between $5,000 and $40,000 and work with the state to pay off the debt by the time participants close on their homes. It must also be their primary residence for at least five years or they will be required to pay a portion of the student loan assistance back to the state.
Participants must also have a minimum credit score of 640 to be eligible and the home must be valued between $86,600 and $131,100 depending on location and family size. Other particulars of the bill are still being worked out by the Maine Senate which is in session until April.
Student loan debt is the third-highest debt Americans carry behind mortgage and credit card debt totaling $1.7 trillion. President Joe Biden pledged to cancel $10,000 in student loan debt during the run-up to the Presidential election but has rarely mentioned it since. Additionally, Biden didn’t mention student debt forgiveness in his State of the Union address this week.