A Possible First Step In Maryland

Though we deal mostly in data, it is always prudent to remain connected and aware of anecdotes. It may even be more so in these kinds of times, where something like conditioning can desensitize analysis. Context is always important for any data, whether market or macro.

My colleague Joe Calhoun pointed out recently a program in Maryland that has been running for several months now. Maryland SmartBuy was launched late last year with a $10 million grant to allow state residents with student debt to eliminate it in the purchase of a Maryland home. Lt. Governor Boyd Rutherford described the rationale in November 2016:

Traditionally, people in their 20s and 30s would account for a substantial share of Maryland’s first-time homebuyers, but we’ve seen a little difference in that demographic over the years, and it’s believed that student loan debt is a part of the challenge.

The idea of Maryland SmartBuy is for any citizens with student debt who can put up 5% of the purchase price as a down payment to receive up to 15% of the purchase price in government assistance extinguishing their student debt. On the surface, it sounds like something out of 2003.

There are other criteria, including that the home purchaser must remain in the house for at least five years. From the government’s perspective, it is more than altruistic aid to struggling recent grads.

“In concept, this is similar to a municipality or state providing a company with tax breaks for relocating to an opportunity zone,” said Mark Kantrowitz, publisher of Cappex.com, a college and scholarship search site. “The government knows that companies bring jobs that yield income tax revenue and newly relocated employees buy homes, appliances and housewares that yield sales tax revenue. Giving loan forgiveness is effectively rebating all or part of the recent college graduate’s income tax.”

That last part is what I think is most important here. The $10 million for Maryland SmartBuy isn’t really all that much, expected to help only around 50 of the state’s current or perhaps future residents. The question is why that state and several others like it are starting to innovate, perhaps prudently at first, for people in this situation. After all, college graduation was supposed to be something of a lifetime boost to earnings right from the get-go.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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