Submitted by Rachel R on Tue, 10/23/2018 - 9:57am
Unload your student loan burden in Maine
Image via Pixabay
If you’re struggling with your student loans, one approach you might not have tried is to pack up and move. No, we’re not suggesting you run away from your responsibilities. But in this case, there could be an opportunity to relocate to get a better deal on your college debt. The state of Maine is offering graduates a chance to live and work in the state and pay off student loans faster than expected.
Under a program called the Educational Opportunity Tax Credit, Maine is encouraging graduates from all over the US to come live and work in the state in exchange for tax credits based on student loan payments to offset state income taxes.
Although the program varies based on when you graduated and whether you’re originally from Maine, it generally allows you to subtract whatever you’ve paid on student loans from your Maine state tax obligations.
So, for instance, if you paid $2,400 in student loans ($200 a month all year long) and your income tax debt for the year is $2,500, then you would owe Maine just $100. They’ll treat the amount paid on student loans as if it was a tax credit, not a deduction.
The concept of tax credits versus deductions is a big deal. A deduction (as is allowed on student loan interest on federal taxes) lowers your taxable income and therefore your taxes. In this example, if your taxable income were $37,400, the $2,400 would drop your taxable income to $35k.
If your tax rate were 15%, that would drop your tax liability from $5,610 down to $5,250. That’s a net reduction in taxes of just $360. Tax credits are much more powerful because they drop the taxes you owe on a dollar to dollar basis. These are preferable, so Maine’s offer is tempting.
Some high-need jobs, like positions in STEM (Science, Technology, Engineering, Mathematics) disciplines, offer an even greater advantage. If your student loan payments exceed your tax liability for the year, Maine will refund you the difference.
For instance, if you paid $3,000 in student loans and your tax liability was $2,000, the state of Maine would cut you a refund check for $1000. That’s a nice incentive and a promising way to attract top talent to the state while also helping graduates with student loans.
Why is Maine going to such lengths to help people pay their student loans? It’s not altruism on the part of the state. It’s practical. The state of Maine has an aging population and a diminishing workforce with tons of jobs left unfilled.
Maine has one of the oldest populations in the US, with the average age being around 43 years. The average is five years older than the US overall. The state set up this tax incentive to attract younger workers who can help drive the economy and fill open jobs.
The tax credit program for student loan originally intended to encourage young residents to stay in the state after graduating college. To qualify, you had to be a Maine resident who attended college there. But now, it is available to graduates from all over the country.
It doesn’t matter where you graduated from, what you studied, or if you’re originally from Maine. The only requirement is that you must have graduated after 2016. You can find more details about the program in the link below.
More than 44 million Americans owe a staggering $1.5 trillion in student loans. With average debt per consumer climbing rapidly, borrowers need solutions. The federal government offers some help for those who work in public service and there are income-driven payment options.
Employers are increasingly considering student loan benefits to entice employees. And now Maine is joining other states that are using student loan assistance to attract top talent to the state. If you’re struggling with student loans or looking for loan assistance, one of these programs may be for you.
For those facing undue hardship dealing with student loans, bankruptcy might be the best solution. To find out more, read reviews from our clients, then call +1-919-646-2654. Contact the Law Offices of John T. Orcutt to schedule a free student loan bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.
Debts Hurt! Got debt? Need help? Get started below!
Serving All of North Carolina
6616 Six Forks Rd Suite 203 Raleigh, NC 27615 North Carolina
Tel: (919) 847-9750
2711 Breezewood Ave. Fayetteville, NC 28303 North Carolina
Tel: (910) 323-2972
1738 Hillandale Road Suite D Durham, NC 27705 North Carolina
Tel: (919) 286-1695
2215 Nash St. NW Wilson, NC 27896 North Carolina
Tel: (252) 234-9194
600 Green Valley Road Suite 210 Greensboro, NC 27408 North Carolina
Tel: (336) 542-5993
South Raleigh (Garner)
143 Highway 70 Garner, NC 27529 North Carolina
Tel: (919) 747-4400
4320 Southport Supply Road SE STE 300 Southport, NC 28461 North Carolina
Tel: (910) 218-8682
4320 Southport Supply Road SE Suite 300 Southport, NC 28461 North Carolina
Tel: (910) 447-2987