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Program would help home-buying grads repay loans
State legislators are weighing a bill that would create a program to help recent college graduates who purchase a home in low- to moderate-income areas repay their student loans.
The idea is to help graduates tackle their debt while providing them an incentive to move into “distressed areas,” where they would generate economic activity and property tax revenue, said Del. Dana Stein, D-Baltimore County, who sponsored House Bill 393.
But the measure has met with some opposition from education officials, and supporters and opponents alike say it still has kinks that need to be ironed out.
HB 393 was given a hearing in the House Ways and Means Committee last week, and its Senate counterpart, Senate Bill 976, is scheduled to be heard on Wednesday in the Senate Education, Health and Environmental Affairs Committee.
Dubbed the Loan Repayment Program for Home Buyers in Distressed Areas, the assistance would only be available to graduates who already participate in the Janet L. Hoffman Loan Assistance Repayment Program, an existing state program for government or nonprofit employees engaged in public service, such as teachers and social workers.
HB 393 would require the state to allocate $150,000 per year for the program starting in fiscal 2016. As written, it does not specify how many graduates would receive assistance each year, how much money each person could receive or for how many years the assistance would last.
Those decisions would be left up to the Maryland Higher Education Commission, which administers the Hoffman repayment program.
MHEC officials, though, are not on board with the proposal.
Peter Tyrell, director of MHEC’s Office of Student Financial Assistance, testified at the hearing that MHEC opposes the bill because linking student loan assistance to housing initiatives is a new and largely untested concept.
But the unexpected combination of the two initiatives is precisely what others find appealing. Nicholas Blendy, deputy director of the Mayor’s Office of Government Relations, who testified in favor of the bill, called the idea “innovative.”
“This is just another tool in the toolbox that I believe and that the administration [of Mayor Stephanie Rawlings-Blake] believes would prove useful throughout the state in revitalizing neighborhoods in some of our communities — certainly neighborhoods in Baltimore but also cities like Salisbury or Hagerstown,” said Blendy, the former legislative liaison for the city’s Department of Housing and Community Development.
For purposes of the program, a “distressed” area is one where the majority of residents qualify as low- or moderate-income, as defined by the U.S. Department of Housing and Urban Development.
“The thought would be to have a double benefit,” Stein, the House bill’s sponsor. said, adding that almost 60 percent of Maryland college graduates have student loan debt, with the average amount being nearly $26,000. “Generally, [Hoffman program] participants are not in high-paying jobs, so presumably, they could use some help paying off their student loans. And at the same time, the program could help some of our state’s lower-income neighborhoods attract homebuyers.”
Stein said he’s open to adjusting the bill or proposing a different variation of the program’s general concept, but there are potential hurdles to the program’s fundamental viability, such as a trend among younger generations to favor renting over buying.
“I guess [this program] may very well not be of interest to some people,” Stein acknowledged. “But for others, if they know they’re interested in, say, living in the city, this could make a difference in them choosing to go ahead and buy.”
If approved, the program would be the first of its kind in Maryland. It has been implemented elsewhere, including in Niagara Falls, N.Y. and several counties in Kansas.
