The state of Maine launched a program five years ago – the Educational Opportunity Tax Credit – to entice college graduates to stay and work, but the program has been underutilized. Maine has the seventh highest college debt in the US and averages more than $29,500 owed per grad. What’s more, 67% of graduates come out of school with debt. So why isn’t this program being tapped and how do you get in on this action if you live in Maine?
Lack of Awareness
Much like the under-use of Income Based Repayment and Pay as You Earn (which is slowly turning around), the issue is lack of awareness. In 2013, the state had invested $22,000 to create a marketing campaign aimed at raising the profile of Opportunity Maine among prospective college students and their parents.
But then that money was wiped out in budget cuts, so what Maine has is a great program that no one seems to know much about. A recent straw poll at the University of Maine showed that just 6% of students knew about the program which was aimed – like other similar state programs – at preventing brain drain.
What’s the Benefit?
Depending on how much you earn, the tax credit can reduce your state tax liability down to zero. It is calculated as a function of monthly student loan payments paid and number of months of the year you lived and worked in Maine. And if your degree is in a high-need area such as science, math, engineering or technology (STEM), you can actually end up with a refund. Those that graduated in 2010 or later are eligible, and the benefit maximizes for those that started college after 2007.
The maximum credit is $65 per month for associate’s degrees and $356 per month for a bachelor’s. This represents a total tax reduction (or potential refund) of up to $5,500. For those not eligible for a refund – because the degree is not in a STEM area – any unused credit can be rolled forward and used up to ten years later.
How Do You Get the Benefit?
Roughly 30% of those that graduate in Maine stay and could be eligible for Opportunity Maine, yet a drastically small percentage of these are taking advantage. It’s simple to get – you just have to complete the Educational Opportunity Worksheet. What’s also cool is that if your company makes student loan payments on your behalf, they can take the credit. You may have to provide proof of student loan payments submitted upon request by the Maine Revenue Services.
You can read more about Opportunity Maine here. One of the people involved in the citizen’s initiative to create the educational tax credit, Andrew Bossie, says, “It’s a real bummer in many ways. But I still hold out hope that people can know and use this program. This is a big deal.”
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