AUGUSTA — A bill to create a state-sponsored program that would erase college loan debt for people who agree to live and work in Maine for at least five years stalled Thursday in the Legislature.

The Finance Authority of Maine would administer the program, which would be paid for by a bond that would go before voters in November. However, initial votes in the Senate (16-14) and House (74-58) were well short of the two-thirds margin the measure needs to go to voters under the state constitution. The bill was later tabled in the House and likely will be revisited when the Legislature reconvenes in early August.

“Student loan debt is an enormous burden on an entire generation of Maine working people,” said the bill’s sponsor, Sen. Nate Libby, D-Lewiston. The average student loan debt in Maine is nearly $30,000.

Sen. Nate Libby, D-Lewiston, sponsored the bill to erase student loan debt for those committed to working in Maine. Staff photo by Joe Phelan

“In Maine, we have the 14th-highest rate of student debt in the nation,” Libby said. Those with high debt aren’t able to fully participate in the state’s economy, he said, because debt forces people to put off purchases of automobiles and homes and, in some cases, keeps them from starting families.

The measure is supported by Republican Gov. Paul LePage, and would give Maine businesses a powerful tool to attract young workers, supporters say. The bill, L.D. 1163, was considered Thursday by lawmakers who were meeting for the first time since July 4, when they approved a $7 billion, two-year budget, ending a three-day partial government shutdown.

The amount of the bond was still in flux. Libby initially proposed $250 million, which was knocked down to a $100 million bond after consultations with the governor’s office. But the Appropriations Committee voted Wednesday to support a $40 million bond, with a competing minority proposal for a $25 million bond.

RELIEF FOR OUT-OF-STATERS, TOO

The program would be available to those who attend college in Maine and to people who get their education outside the state. The details of how the program would work, such as the amount of debt forgiveness available to any one person, whether a person would need to graduate from a school to qualify, or what would constitute breaking the contract, would be worked out in rulemaking after voters approve the bond.

LePage said Thursday morning that the bond is needed to beef up the state’s aging workforce. Maine is the oldest state in the nation.

“We don’t have enough workers,” he said during his weekly appearance on WGAN radio. “This is a critical problem in Maine and it’s getting worse.”

The bond, he said, would bolster the state’s workforce.

“This is an attempt to attract young professionals, people with trades and advanced degrees, to come to Maine, live and work here and we’ll help you pay off your student debt,” LePage said. He noted that, generally, Democratic lawmakers supported the bond and Republicans opposed it, but “I don’t know why.” He said Republicans had not offered any of their own proposals to counter Maine’s aging workforce.

“I looked at it this way: If you don’t like my plan, come up with your own, but come up with something. This is a critical problem in Maine and it’s getting worse,” LePage said. “You can’t drive in your car a mile without seeing ‘Help Wanted’ everywhere. We need to lower the age of our population, we need more people of working age in the state of Maine.”

However, even some of LePage’s staunchest Republican allies are saying the proposal is unsound fiscal policy.

Rep. Heather Sirocki, R-Scarborough, a member of the Legislature’s budget-writing Appropriations Committee, said she would not support a bonding bill that aims to provide student loan debt relief.

“I think this is bad public policy for the state to borrow money it does not have, to give to students who borrowed money they don’t have, to pay off their student loans, to which they made the commitment, not the state of Maine taxpayer,” Sirocki said Thursday.

House Minority Leader Ken Fredette, R-Newport, said Thursday that Republicans have no appetite for any borrowing proposals except for highway and bridge construction. A bonding bill that would ask voters to approve $105 million for a roads, bridges and culverts grant program for municipalities sailed easily through both chambers, securing the two-thirds margin necessary to send the request to voters in November.

But a bill asking voters to approve a $50 million bond that would be used to help Maine companies commercialize their products through research and development also was tabled and remains undecided.

REPUBLICANS CAUTIOUS ON BONDING

Fredette said that in concept, Republicans are not opposed to either of the two bonding bills they voted against, but that the state needs to be prudent given that voters in June approved a $50 million bond aimed at boosting equipment and technology upgrades for seven key business sectors in Maine, including aquaculture and forestry.

“We just passed an R&D bond literally a month ago,” Fredette said. “There should be a strategy to this, and we have finite resources and lots of priorities. We just passed a bond so it just doesn’t make a lot of sense.”

Student loan debt has grown to more than $1.3 trillion nationwide, according to the Federal Reserve. Nationwide, almost 70 percent of graduates in 2015 carry an average debt of $30,100, according to the Project on Student Debt, which tracks the data.

Maine ranks 17th in the nation for student loan debt. Graduating seniors from Maine’s public and private nonprofit colleges in 2015 had an average $29,644 in debt, slightly below the national average.

Neighboring New Hampshire has the top ranking in the nation, for both the percentage of graduates with debt and the highest average amount of debt, according to the debt project. In 2015, graduating seniors in New Hampshire had an average of $36,101 in debt.

The proposed Maine program, tentatively called the Maine Student Loan Debt Relief Program, would be administered by FAME, which already administers several higher-education finance programs, including employer tax credits and industry-specific loan forgiveness programs.

The federal government and other states also have industry-specific loan forgiveness programs, usually in areas that typically experience workforce shortages, such as health care and education.

‘WE NEED TO ACT BOLDLY’

In testimony Monday, Libby said the student loan payments could be made two different ways. Employers would be reimbursed by FAME for student debt payments they make on behalf of their employees, or individuals could arrange for FAME to make payments to the loan services on their behalf.

The original bill said that only half of a person’s college debt could be covered by the program, and it had a clawback provision that meant a person would have to repay all the student loan payments made on their behalf if they leave the state early or don’t somehow meet the qualifications to be worked out in rulemaking.

“We need to act boldly and swiftly before this crisis grows any further,” Libby said. He said the bill was being left in legislative limbo for now so LePage can talk more with fellow Republicans about the measure and hopefully win more support.

If passed by the Legislature and signed by the governor, the bond would still need to be approved by voters in November.

Staff Writer Scott Thistle contributed to this report.

Noel K. Gallagher can be contacted at 791-6387 or at:

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