Home ownership among those in their 20s and 30s is down. The State of Maryland thinks that student loans are a big part of the problem. In order to attract recent grads, Maryland will pay off student debt for those who buy a house in Maryland.
The full value of the student debt that the program will pay off is limited to 15% of the purchased homes value. That means that if you buy a $200,000 house, Maryland will pay off up to $30,000 in student loans as long as the homebuyer lives in the house for at least 5 years. The program is called Maryland SmartBuy.
In order to qualify homebuyers need to buy an eligible home using an eligible lender, full details on the program can be found at the Maryland SmartBuy website. It is worth noting that the minimum down payment on the house is only 5%.
How Many Homes/Borrowers Can Benefit?
According to the Maryland Department of Housing and Community Development, there are currently 20 move in ready homes throughout the State of Maryland that would be eligible for the program. Additionally, the state has set aside $10 million to cover the cost of the program. It is estimated that this initial $10 million investment will help 50 borrowers.
Why Get Excited Over 50 Homes?
What makes the Maryland SmarBuy program noteworthy, in addition to the huge benefits received by the people who qualify, is the many things it represents.
First, the creation of the program represents an acknowledgment by the government that there is a real connection between the lack of homeownership by millennials and student debt. While this fact should be fairly obvious, the reality is that many people do not see a connection or an issue with the current circumstances. The State of Maryland feels that investing in recent grads is a good way of stimulating the Maryland economy. They are ready to spend at least $50 million on this belief.
Will Other States Follow?
This is the big question. It will depend on how successful the SmartBuy program is in Maryland. Good outcomes will likely lead to more investment.
However, it is worth pointing out that there are likely many ways states can incentive student loan borrowers to move to their particular state. As states recognize the lack of 20 to 30 residents, they can create a number of different programs to attract student loan borrowers. Such programs could include home buyer programs like the Maryland SmartBuy, but they could also be as simple as tax breaks for residents with student debt. Such a program would make a state friendly for recent grads an could quickly improve on a states skilled labor force.
Regardless of the long term consequences, this program is good news for all student loan holders and great news for borrowers looking for property in Maryland.