A new law became effective in 2008 that offers student loan borrowers a Maine State tax credit. Qualifying Maine college graduates who work in Maine after graduation may be eligible for the tax credit. The program is officially known as “Opportunity Maine” and students begain applying during the Spring 2008 semester. Use this link for helpful information: http://www.maine.edu/system.
With additional questions please visit the Opportunity Maine site at: http://www.opportunitymaine.org.
Please be aware that the above is based on the program information that is currently available as provided by the Maine State Department of Education in coordination with the Maine State Board of Education.
Effective January 1, 2008
What is Opportunity Maine?
The Opportunity Maine program provides a state income tax credit for student loan payments made by degree earners who live, work and pay taxes in Maine after graduation. As an alternative, Maine businesses can make the educational loan payments for their employees and then these Maine businesses can claim the tax credit.
Who Is Eligible?
Any student (regardless of whether the students is originally from Maine or not) who earns an associate’s or bachelor’s degree at a Maine college (public or private) and who borrows student loans after January 1, 2008 meets the initial eligibility criteria. Loans taken before January 2008 are not eligible for a tax credit.
Upon graduation, a participant who continues to live and work in Maine can claim a tax credit equal to the amount of any educational loan payment (capped at the level of tuition and fees for the University of Maine System or the Maine Community College System, depending on the degree earned – associates or bachelors).
Clarification and/or Limitation of Eligibility
For students already enrolled in an associate’s or a bachelor’s degree program prior to January 1, 2008, only the percentage of the degree work completed after January 1, 2008 qualifies for tax credits.
For the purpose of this program, student loans include all student loans certified by the Financial Aid Office, including but not limited to Stafford Loans, Perkins Loan, and Private/Alternative Educational Loans.
Students must complete all of their coursework through a Maine college in order to be eligible for the tax credit.
Loans must have a repayment term of at least eight years in order for the student to be eligible for the Opportunity Maine tax credit.
If a student accelerates repayment of his or her loan, he or she forfeits any right to claim an educational tax credit for that or any future tax years (except for any credit that has been carried over from a prior tax year).
Any refinancing (consolidation, for example) must be separate from other debt and must result in a decrease in the annual repayment and remaining indebtedness.
Students who attend school in Maine meet the definition of a Maine resident while enrolled in an associate’s or bachelor’s degree program. When the student graduates and seeks to claim the educational opportunity tax credit, the student must meet the definition of “resident individual” which governs the imposition of the income tax.
More about Opportunity Maine
The Opportunity Maine program started as just an idea, then became a citizens’ initiative and was ultimately passed by the Maine Legislature and signed by the Governor to become state law.
Here is what the people at Opportunity Maine have to say about the program:
“Having this program will make it more affordable for Mainers to earn a college degree. More degree holders will improve Maine’s workforce by creating more jobs, developing and attracting more new businesses to Maine and strengthen the overall economy. Opportunity Maine will make it easier for degree earners to start their careers, families, or businesses in Maine, and cultivate the skilled workforce and entrepreneurial talent we need for strong economic growth in the 21st century. Opportunity Maine will open doors of educational and economic opportunity for all Mainers, making it easier to get high-paying jobs and stay in Maine.”
According to information on the Opportunity Maine website www.opportunitymaine.org:
- Both degree attainment and incomes in Maine lag roughly 25% behind the New England average, placing Maine last in the region on both counts. Jobs cannot be created without investing in our workforce, and businesses will not grow or locate here if we do not have the educated workforce they need.
- Research shows that the average bachelor’s degree earner in Maine makes $16,600 more per year than the average high school diploma holder and associate’s degree earners make over $10,000 more. Now, for Maine’s working college graduates, Opportunity Maine will provide an annual average of $2,100 for every bachelor’s degree earner and $1,100 for every associate’s degree earned in loan assistance for the life of their student loans.
- For Maine’s Employers, by participating in the Opportunity Maine program, employers can help existing and new employees gain the education they need by paying their student loans and taking the tax credit themselves, substantially reducing their taxes while offering an employee benefit that competitors in other states cannot.