Sen. Libby’s student debt relief bill survives to fight another day
Legislature votes to carry the bond bill over to the next legislative session
AUGUSTA — A bipartisan effort to relieve the immense burden of student debt on Maine families and the state’s economy will be carried over to the next legislative session.
The move secures additional time for supporters, including Democrats and Republican Gov. Paul LePage, to win additional votes in the House and Senate so the bill may ultimately be passed into law.
LD 1163, sponsored by Assistant Senate Democratic Leader Nate Libby of Lewiston, was originally written to fund a $250 million student debt forgiveness and refinancing program. Through negotiations with Gov. LePage, the bill was pared down to $100 million in an effort to win additional support from Republicans. But in initial votes, the bill did not win the two-thirds support necessary for final enactment.
“Student debt relief remains one of the top priorities of both myself and for Democrats in the Senate, and we will continue to fight to build support in the Legislature to match the immense groundswell in favor of student debt relief that we see in every community of our state,” said Sen. Libby. “Rather than force a vote today, we were able to live to fight another day. We’ll be back in January, just as dedicated to this cause as ever.”
The national student debt load topped $1.4 trillion last year. Sen. Libby’s bill would create a first-of-its-kind student debt relief program for Mainers who are being held back by student loans.
The average student loan debt for Maine graduates is nearly $30,000 — the 14th-highest in the nation. One in ten Maine borrowers is in default. Of those who are in repayment, many are sacrificing their ability to fully participate in the economy or move on to the next stage of their lives so that they can repay their student debt.
The state currently offers the Educational Opportunity Tax Credit to help Mainers with student loan debt, but the program is severely underutilized. Moreover, tax credits by their very nature provide once-annual relief to eligible taxpayers while doing nothing to ease the month-to-month burden of a high debt load.
“Student debt is crushing thousands of Mainers while national loan companies, some of which use predatory tactics to convince students to rack up debt, get rich off high interest rates. Research shows that a whole generation of Americans is delaying purchasing a home or a new car, getting married of having kids, so that they can pay off their student loan debt” said Sen. Libby. “This delay hurts our state’s economy today, and jeopardizes the ongoing growth and success of our state for the future. Maine should lead the way by freeing its residents, however it can, from the financial and social drag of high debt loads.”
As amended, the bill would authorize a $100 million bond to establish a new program, administered by FAME, to forgive up to 15 percent of an eligible applicant’s student debt annually, with a lifetime benefit cap of $250,000. FAME would make payments to loan servicers on behalf of eligible Mainers, and to employers who make debt payments on behalf of their employees. Under such a forgiveness regiment, an eligible Mainer could see their student debt erased in roughly 6.5 years.
The bill will be taken up by the Legislature when it reconvenes in January.