AUGUSTA — Gov. Paul LePage urged lawmakers to approve $50 million in bonds to provide zero-interest student loans to Mainers attending school in-state while allowing others to refinance if they stay in Maine after college.
With Maine facing a “demographic winter” as more of the workforce approaches retirement-age, the state needs a multi-pronged approach to convincing recent college graduates to stay in Maine or move to the state, LePage said. The governor is proposing a Finance Authority of Maine program to provide zero-interest loans – backed by $50 million in voter-approved bonds – to college students who live and work in the state for at least five years after graduation, with possible extensions if they remain in the state longer.
Students with existing debt could consolidate loans or refinance to a lower interest rate if they agree to reside and work in Maine for at least five years.
“Our businesses need young people here to fill the jobs that will be coming available when people retire,” LePage told members of the Legislature’s Appropriations and Financial Affairs Committee. “We need young people to settle here and have families. We need them to buy houses from those who retire and downsize, to keep our communities going. The longer we can have a young person here after graduation, the more likely they will make a long-term commitment to the state.”
The bill, L.D. 1834, was endorsed Thursday by officials from the University of Maine System, the University of New England and Eastern Maine Health System but is likely to face scrutiny from some lawmakers within the governor’s own party. Last year, a bill co-crafted by the LePage administration proposing a student loan repayment program with $100 million in bonds stalled in the Legislature largely because of Republican opposition.
LePage acknowledged afterward that some Republicans “have a problem” with the student loan programs. But he blamed Democrats for blocking another bond bill – which he says is the business side of the student loan initiative – to invest in research and commercialization.
“I think they need to work together to come up with” a solution, LePage said. “I’d like to see both of them in the final package.”
A recent report by the Institute for College Access and Success estimated that members of the Class of 2016 attending four-year colleges and universities in Maine graduated with, on average, $31,295 in debt. That ranked Maine eighth nationally behind New England neighbors New Hampshire, Connecticut and Massachusetts.
High debt loads drive some Maine college graduates to other states where jobs are more plentiful and salaries higher. Meanwhile, the state is facing the growing economic, health and societal challenges that come with an aging population.
LePage said his bond bill for student loan debt should be coupled with another proposal from his office that would provide a tax credit to students repaying loans or companies that help pay down employees’ loans. That bill, L.D. 1537 sponsored by Republican Rep. Matthew Pouliot of Augusta, is pending in the Legislature’s Taxation Committee.”
Bill sponsor Rep. Marty Grohman, I-Biddeford, acknowledged that there are multiple options for addressing the serious student loan debt issue. The Legislature is still considering a bill to offer a state-financed student loan repayment or forgiveness program to graduates who commit to working in Maine. But Grohman said the zero-interest loan program would set Maine apart nationally at a time when the state is losing college grads to other areas.
“I think this would also be an important tool for employers,” Grohman said. “I think if you’re a Maine employer and you want to attract a recent college graduate – whatever age they may be – this is something that we can offer that no one else can. And I’m really excited about that.”
Grohman’s bill is one of dozens of proposed bond measures – totaling more than $700 million – competing for what is traditionally a modest borrowing package, often consumed largely by transportation projects. Because bond bills are often among the last issues settled during the legislative session, they often become bargaining chips in negotiations between legislative leaders from both parties and LePage, who has also withheld selling voter-approved bonds in order to gain leverage on other issues with lawmakers.
Bond measures must receive two-thirds support in both the House and Senate before they can be placed on the statewide ballot for voter consideration.
This story was updated at 1:45 on Saturday, March 17, 2018, to correct the student loan tax credit bill that Gov. Paul LePage says should be coupled with his $50 million bond proposal.
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