Thanks to federal forbearance on student loan payments during the pandemic, Maine has an opportunity to make college more affordable this year for students with low incomes by increasing the Maine State Grant without any cost to the General Fund.
The Legislature should seize this easy opportunity to reduce future debt burden on Mainers.
Savings from Opportunity Maine provide an opening to make college cheaper now
For years, one of Maine’s programs to make college more affordable has been the Educational Opportunity Tax Credit, often referred to as “Opportunity Maine.” The program provides college graduates in Maine with a state income tax credit based on the amount they pay for education loan debt.
Opportunity Maine can make it easier for graduates to pay down their education debt, but this year the program has amassed massive savings because the federal government put federally held education debt into forbearance as a form of economic relief during the pandemic.
With a temporary reprieve from student loan payments, many Mainers who would normally receive a tax credit through Opportunity Maine will not receive one (or will receive a much smaller one) this year, creating large savings in the program. Maine Revenue Services estimated the savings at $13 million in their most recent revenue forecast.
Lawmakers can convert Opportunity Maine Savings into State of Maine Grants
Unlike Opportunity Maine, which helps graduates pay for their education after they’ve already accumulated debt, the State of Maine Grant helps Maine students with low incomes afford college on the front end — reducing the amount of debt they take on in the first place. As a result, the Grant has a much larger impact on total education cost for students.
Earlier in March, the Legislature’s Committee on Innovation, Development, Economic Advancement, and Business voted unanimously to support LD 292, a bill to increase the minimum size of the State of Maine Grant from $1,000 to $2,000. The bill pegs the cost of the increase at $10 million annually in 2021 and 2022. Another bill, LD 531, would increase funding for the State of Maine Grant by $13 million.
Lawmakers should use the cost savings from Opportunity Maine to fund this increase of the State of Maine Grant. These state dollars are usually spent to help Mainers afford higher education, and Maine should continue to put them to use that way by increasing funding for the State of Maine Grant. Doing so will also preserve General Fund dollars for other needs as Maine looks to fund the economic recovery from the COVID-19 pandemic.
Burdensome education debt prevents Mainers and our state as a whole from reaping the full benefits of higher education. For many, it creates real hardship. Increasing the State of Maine grant for low-income college students would alleviate hardship for many. Appropriating funds from savings in the Opportunity Maine tax credit to pay for this increase makes good fiscal sense and would preserve other General Fund dollars for additional urgent needs.