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Maine Is Pardoning Student Loans For First-Time Homebuyers, Learn Why And How
Student loan debt crisis, home buying, and labor shortages. These three items are at the center of the most recent Maine legislative proposal, The Maine Smart Buy program, which will allow for the pardoning of student loans for first-time homebuyers. The goal of the initiative is to boost local real estate, as well as attract people to the state to help combat its current labor shortage. The proposal would help first-time homebuyers in the state with student debt to achieve homeownership.
As Business Insider reported, 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 at the time of closing on the home. They would be required to use their new homes as their primary residence, and if the buyer chooses to sell the home within five years of the purchase, a portion of the student loan assistance must be repaid to the state.
They must have a minimum credit score of 640 to be eligible, and their home purchase must be valued between $86,600 and $131,100, depending on family size and location. The bill is slated for more work sessions, and the Maine Senate is in session until April, Business Insider said.
Maine Senate President Troy Jackson said that the state is facing “a real challenge of filling the job market.” He told Insider that Maine has become a retirement state without a lot of prime-age workers, adding that at the same time, those younger workers might not have the ability to make a down payment on a first home or possess the financial record of a more experienced buyer.
“A lot of people are trapped in debt. I believe very strongly that was by design,” Jackson told Insider.
Jackson explained that Maine’s housing market has exploded due to the pandemic. Therefore, he believes pardoning student loans is one potential solution for lifting debt that may be keeping workers from taking the plunge to pursue a dream job, buy a house, or move to a new state. It may also help address the persistent issues that employers say they’re facing in hiring new workers.
“Our wage system in Maine is not right-sized for the housing market right now. People talk about the American dream, and people talk about how they could do it before. No one’s seen this before. We’ll help you pay down your college debt, but you’re gonna commit to living in the state for five years,” Jackson said.
“I think this should be a priority for all of us. I would now hope that the business community, which runs many of my colleagues’ mindsets, would get involved in this because they’re screaming for the state to do something to help bring workforce to Maine,” he added.
Currently, it is estimated that there is a $1.7 trillion student debt crisis in the U.S., affecting Black and brown people disproportionately. This situation makes it harder for them to purchase a house, as many official polls say.
On Monday, NAACP President Derrick Johnson and Senate Majority Leader Chuck Schumer wrote an OP/ED for BET calling for Biden to put an end to the student loan debt crisis.
“For Black Americans, the burdens of student debt are especially severe. They are far likelier than others to take out federal student loans to begin with, and on average, almost half will default within 12 years. Paying debt back is also often near-impossible: while the median white borrower will owe just 6% of their debt 20 years after starting college, the median Black borrower will still owe 95% of their debt over the same stretch of time,” they wrote.