January 1

Tax credit often overlooked by Maine college graduates

The state has cut funds to market the program created to boost enrollments and help stop ‘brain drain.’

By Alanna Durkin
The Associated Press

AUGUSTA — It’s been more than five years since Maine created tax credits for college graduates who remain in the state to work, but only a fraction of graduates take advantage of the program because of the state’s failure to effectively market it, lawmakers and advocates say.

Today's poll: College grad tax credit

Should lawmakers allocate funds to market the Educational Opportunity Tax Credit for Maine college graduates who remain in the state to work?

Yes

No

View Results

tax credit at a glance

Maine residents who graduate from an in-state college, university or community college and stay in the state after graduation may be eligible for a tax credit to help pay off their student loans.

Here’s how to take advantage of the Educational Opportunity Tax Credit, if you qualify:

Fill out a Credit for Educational Opportunity Worksheet, which is available on the Maine Revenue Services website and allows graduates to calculate the credit they’re eligible to receive: http://1.usa.gov/1hdt0id.

That credit should be entered on individual income tax forms, and both forms should be filed with Maine Revenue Services, which may ask for additional information, including proof of educational payments or the degree received.

If you’re using tax-preparation software, it should ask whether you qualify for the tax credit and whether you’d like to use it.

Lawmakers heralded the Educational Opportunity Tax Credit as a bold plan to prevent “brain drain” and keep the best and the brightest in the state when they approved it in 2007. But with no money behind a marketing strategy, and recent efforts to fund one being cut, the program has gone overlooked and underutilized.

“The Legislature continued to expand the program and talk about how great they think it is in the abstract. But when it comes time to actually making sure students are aware of it, they haven’t done that,” said Rob Brown, executive director of Opportunity Maine, a nonprofit created to pass the initiative that works on college affordability issues.

A student who graduated from a state university, college or community college in 2013 and stayed in Maine can claim up to $356 for a bachelor’s degree and $65 for an associate’s degree to reduce the amount they owe the state in taxes.

In 2012, 1,157 graduates received the credit, according to Maine Revenue Services. That’s up from about 710 the year before, but still far too few considering the thousands of Mainers graduating from college each year, advocates say.

About 30 percent of graduates surveyed by the Finance Authority of Maine went to school in the state and remained here after graduation in 2006, the latest year for which such data is available.

Democratic Senate President Justin Alfond of Portland who worked on the campaign to create the tax credit, said that only about four of the 60 students he spoke to on a recent visit to the University of Maine had heard of the program, which was supposed to boost college attendance and pump millions of dollars into the state’s economy.

Last year, lawmakers gave the finance authority $22,000 to contract with a nonprofit to create a marketing campaign targeting high schools and parent groups.

But the money was eliminated in budget cuts laid out by Republican Gov. Paul LePage’s administration, which was directed by the Legislature to find $34 million in savings. The funding for the next fiscal year may be erased when lawmakers consider further cuts next session.

Richard Rosen, director of the Office of Policy and Management, said when trying to figure out where to cut, the administration looked at programs that weren’t running yet.

“We felt it was appropriate to go to some of the newest initiatives that weren’t yet launched as suggestions for savings,” Rosen said.

Maine Revenue Services estimates that the tax credit will cost the state about $3.5 million this fiscal year and $5.2 million next year, but lawmakers are considering capping it.

University of Maine financial aid officials say they tell students about the program and make resources available on their website but can’t guarantee students sign up since it’s something they do after they graduate.

“We are trying to do more in general to help students manage their loans and help them just become better consumers. I think the Opportunity Maine tax credit does play a part in that,” said Gianna Marrs, director of student financial aid at the University of Maine.

Grace Mueller received about $500 in credits after she graduated from the University of Southern Maine in 2009. Since she graduated shortly after the program was created, much of the $24,000 she owed in student loans didn’t qualify. But the credits she received were still appreciated.

“It definitely made a huge difference in terms of my cash flow,” said the 27-year-old Mueller, who hopes to apply to medical school.

Last year, the law was changed to allow those who graduate with science, math, engineering and technology degrees to receive a refund from the state if their loan payments are higher than what they owe in taxes. Before that, the credit could only be used to reduce the amount of taxes owed to zero.

But unless a strategic effort is made to get the word out, that, too, will fall flat, advocates say.

“It’s a real bummer in many ways,” said Andrew Bossie, former president of the group that launched the citizens’ initiative to create the credit and now executive director of Maine Citizens for Clean Elections. “But I still hold out hope that people can know and use this program. This is a big deal.”

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Today's poll: College grad tax credit

Should lawmakers allocate funds to market the Educational Opportunity Tax Credit for Maine college graduates who remain in the state to work?

Yes

No

View Results