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Maine bill would forgive up to $40K in student loan debt for first-time homebuyers

WGME Portland logo WGME Portland 2/23/2022 Mal Meyer, WGME

AUGUSTA (WGME)-- Crippling debt is a top reason why many college graduates can't buy a house, but a Maine bill could help. 

On average, Maine graduates have about $33,000 in student loan debt. It's one of the highest averages in the country.

"I owe about $70,000 in student loans," Augusta homeowner Anna Masciadri said.

Masciadri graduated from Kaplan University in 2015. That's also when she tried to buy a home.

"When I went to the banks, the first bank wouldn’t even touch me and they told me to seek help elsewhere. So I went to a bank that was willing to take a little bit of a risk," Masciadri said. 

She says she was approved for a $70,000 home loan if she put down a $10,000 deposit.

"That doesn’t buy you a whole lot, even in Augusta," Masciadri said.

A 2017 report found 52 percent of non-homeowners said they couldn't qualify for a mortgage because of their debt to income ratio.

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Some Maine lawmakers are proposing a way to help would-be first-time homeowners. In part, they want to offer up to $40,000 in student loan forgiveness. 

"A lot of this is trying to bring our young people back to Maine [and] helps them be able to finance a home," Sen. Troy Jackson (D-Aroostook) said.

Jackson has been fighting for this for more than a year. A bill he proposed last year has led to the creation of the proposed Maine Smart Buy program, which has been detailed by MaineHousing and the Finance Authority of Maine.

That program is at the heart of a bill that was discussed during a hearing Tuesday

"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," Jackson said. 

It would allow those who qualify to buy a home using the MaineHousing First Home Loan Program, which offers a wide range of assistance.

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If lawmakers pass the bill, it would also take $10 million from the state's General Fund.

"We need people to come to Maine to help be a part of our tax base, be part of economy. And I think this is a great way to do it," Jackson said. 

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