Tax credit proposed for student loans - Waterville Morning Sentinel

by Jerry Harkavey

PORTLAND -- A student-led group Tuesday announced a campaign to initiate legislation that would provide state income tax credits to offset student loans to graduates of Maine colleges or universities who stay and work in the state.

Opportunity Maine said it will soon begin to gather the roughly 50,500 voter signatures needed to place the question on the statewide referendum ballot in November 2007.

Backers of the initiative said it would help Mainers meet the rising costs of higher education and enhance the state's economic prospects by enabling more graduates to work in their home state.

"I have spoken to so many other students who are struggling with the increasing cost of education and who have to look out of state for a job that can help them pay their student loans -- even if they want to say and work in Maine," said Andrew Bossie, president of the University of Southern Maine student body and president of Opportunity Maine.

The proposal was detailed at a news conference at Lewiston-Auburn College.

The amount eligible for tax credits would be capped at the cost of tuition and fees for the University of Maine System or the Maine Community College System. Thus, credits for graduates of Maine's more expensive private colleges may cover only a portion of their loans.

Under the proposal, employers would have the option of paying the student loans of an employee and taking the tax credit for their business.

While programs elsewhere have been targeted at specific occupations such as teachers, nurses and doctors, campaign director Rob Brown said "no other state is doing anything nearly this universal."

Nearly half of all college graduates in Maine leave the state after they get their degrees, Brown said, and one of the primary reasons is the inability to land a job that provides a high enough salary to pay off student loans.

Opportunity Maine made an informal presentation to the University of Maine System trustees last weekend, and the chancellor and trustees were interested, said John Diamond, university system spokesman.

A formal presentation will be made in November or January, at which time trustees will consider endorsing the proposal.

"The idea of expanding education and affordability is something that the board is wanting to do with its own agenda. That's why they'd like to get more information about the specifics of the students' proposal before they take a formal stand," Diamond said.

The initiative, which has drawn support from labor unions and chambers of commerce, was rooted in discussions among student leaders that began last November, Brown said.

They decided to bypass the Legislature and launch a petition campaign in order to promote sustained public debate on the issue, he said. Because an educated work force is a key element in economic development, he suggested that the discussion could prompt businesses to look at Maine as a potential site to locate or expand their operations.

Other measures to provide financial help with student loans have gone before the Legislature but either died in committee or on the floor, or were passed but did not receive funding, he said.

Opportunity Maine has projected that its proposal would generate more than $80 million in increased tax revenue and spillover economic benefits by the 10th year. Annual costs to the state would run several million dollars during each of the first few years, but there would be a net gain as more people enter the work force, the group said.

The group projected that the legislation would enable an additional 25,500 Mainers to earn degrees over the 10 years, boosting their earnings by an average of at least 15 percent.

"By making education affordable to students and laid-off workers, Maine will entice the type of industry that is critical to a sustainable economy," Bossie said.

Organizers planned to seek 1,200 volunteers, including students, parents and teachers, to gather signatures at polling places on Nov. 7.