Refundable tax credit offers newcomers up to $25,000 toward student debt
In a continued effort to attract new workers and support young professionals building their futures in the state, Maine is highlighting its generous Student Loan Repayment Program, a refundable tax credit that can return up to $2,500 per year—and as much as $25,000 over a lifetime—to eligible residents repaying their higher-education loans.
The program, originally designed to retain Maine graduates, has evolved into one of the most newcomer-friendly student debt incentives in the country. It allows individuals who earned a college degree anywhere in the world after 2007 to receive substantial financial relief simply by living, working, and making student loan payments in Maine.
A Financial Boost for Newcomers
State officials say the program is part of a strategic push to reverse Maine’s longstanding workforce shortages and aging demographic. As one of the oldest states in America, Maine has been expanding policies aimed at drawing in young professionals, remote workers, and families.
“This is about helping people put down roots,” a DHHS spokesperson said. “We want newcomers to thrive here—not just live here. Helping reduce student loan burdens is one of the most impactful ways we can do that.”
The refundable tax credit stands out because it acts as actual money back to the resident, not a simple deduction. This means eligible participants may receive a payment even if they owe no income tax.
Who Qualifies?
The program’s qualifications remain surprisingly broad, creating accessibility for both longtime residents and those relocating from out of state:
- Degree Earned After 2007: Associate, bachelor’s, and graduate degrees all qualify.
- Accredited Institutions Worldwide: Whether the degree is from Maine, another U.S. state, or a university overseas, it counts as long as the program was accredited.
- Maine Residency During the Tax Year: Applicants must have lived in Maine during the months they’re claiming.
- Income Requirement: Participants must have earned a minimum amount of income for that tax year. In 2024, this threshold was $13,244.
For many newcomers—particularly remote workers or those accepting Maine-based jobs—these requirements are easy to meet.
Eligible Loan Payments
The structure of the credit focuses on direct, verifiable student loan payments. Eligible payments must meet the following criteria:
- Loans must be for higher education only. Family-issued loans and home equity loans do not qualify.
- You must pay the lender directly. Payments made by third parties cannot be claimed, even if reimbursed later.
- Only months spent living in Maine qualify. New residents who move mid-year may still receive prorated benefits.
- Deferred loans do not count. Only months with actual payments are eligible for reimbursement.
These guidelines aim to ensure the program supports genuine debt reduction while encouraging new residents to begin repayment as soon as they settle in the state.
A Tool for Recruitment and Retention
Population experts have repeatedly warned that Maine’s aging workforce poses significant long-term economic challenges. In response, the state has broadened its approach—embracing remote workers, easing professional licensing requirements, and expanding relocation incentives like this student loan credit.
For individuals considering a move, the credit is often a deciding factor.
“Moving to Maine felt like the right lifestyle choice, but the student loan credit sealed the deal,” said one recent transplant from Pennsylvania. “It’s a meaningful financial benefit, especially for young professionals trying to buy homes or start families.”
Local economic leaders agree that incentives like this help Maine stay competitive with states such as Vermont, Colorado, and New Hampshire, which have launched similar programs aimed at luring young workers.
How to Participate
Residents interested in claiming the credit should keep documentation of the following:
- Dates of residency in Maine
- All student loan payments made during those months
- Annual earned income
The credit is issued when residents file their annual Maine income tax return. Because it is refundable, many participants will receive a direct payment even if they owe no state taxes.
A Welcome Mat for the Next Generation
As Maine continues to invest in strategies to recruit new workers and support the people who choose to live here, the Student Loan Repayment Program stands out as a major incentive for recent graduates and early-career professionals.
For newcomers deciding where to build their future, Maine is sending a clear message: We want you here—and we’re willing to help you thrive.
For more information on the program visit www.liveandworkinmaine.com/studentloans