Treasurer Lemoine Joins Governor Baldacci, Representative Tim Driscoll and Representative Ed Finch in Highlighting New Maine Tax Breaks on Student Loans and More Funding for Higher Education in Maine

June 28, 2006

For Immediate Release
June 28, 2006 Contact: David Lemoine, 207-624-7477

Treasurer Lemoine Joins Governor Baldacci, Representative Tim Driscoll and Representative Ed Finch in Highlighting New Maine Tax Breaks on Student Loans and More Funding for Higher Education in Maine

AUGUSTA – Treasurer Lemoine joined Governor John E. Baldacci, Rep. Tim Driscoll, D-Westbrook, and Rep. Ed Finch, D-Fairfield to outline recent changes making it easier to save for and pay for college. Their press conference was held at the University of Maine, Augusta campus earlier today, just three days before the federal interest rate on student loans is set to jump from around 3 percent to more than 8 percent for many students. “As the Governor has repeatedly pointed out, the jobs of the future require education today,” said David Lemoine, who sits on the board of the Finance Authority of Maine, and is chair of the NextGen investment advisory committee. “He and the legislature have stepped up to the plate repeatedly over the last two years to make that happen even in the face of serious budget constraints.” Governor Baldacci pointed out that July 1 is coming soon and “while that normally means that we’re excited about the bulk of the beautiful Maine summer that is still ahead of us, this year it’s a little more stressful for college students and their families.” Governor Baldacci continued, “It’s a bad day for students trying to save for college because they know that federal changes are going to take effect on that day, changes that are going to result in making it more difficult financially for higher educational opportunities.” The Governor highlighted three initiatives to help students that will begin in the fiscal year starting July 1. The first initiative is a new state tax deduction for contributions to Section 529 College Savings programs (such as Maine’s NextGen plan). These breaks were implemented as part of the Supplemental Budget passed by the Legislature in March and will save Maine families almost $300,000 during the second half of the fiscal year (the tax deduction goes into effect Jan. 1, 2007) and nearly double that in the following fiscal year. Individuals earning less than $100,000 and families earning up to $200,000 that save for college using a 529 plan, such as NextGen, will be eligible for a $250 deduction on their taxes. Maine is the first state in the nation to offer such a deduction, even on 529 plans that are based out of state. This is an important first step and we hope to increase the deduction in future years. “Up until last month, no other state in the nation offered this,” Representative Driscoll said. “It allows Mainers to enhance their options with respect to investments they want to make… That, along with the interest income savings, and the increased revenue to the university system to help keep tuition costs down, I think as a package, it’s a great win for families and students in Maine.” In addition, the supplemental budget passed in March also extends the tax deduction on student loan interest from five years to the full life of the loan. That conforms with the federal tax deduction on student loan interest and will save Maine students and their families $489,000 in the coming year. The provision goes into effect on Jan. 1, 2007, half way through the fiscal year, meaning savings the following year will be roughly double. Kari Leighton, a traditional student at University of Maine – Augusta, spoke at the press conference about the need for programs like these to help students save for and pay for college. “I do want to thank everybody for doing what they’re doing because it’s time that we do help students and it’s time that they have the opportunities that everybody should have,” Leighton said. The third and final initiative outlined by the Governor was the $5.8 million in additional funding for higher education, passed by the Legislature in the final days of the recently-ended session. While the money is not earmarked for any specific purpose, its intent was to slow down projected tuition increases at the University of Maine and Maine Community College systems, and is having that effect. Of that amount, $1.6 million went to the community colleges, and $4.2 million to the university system.

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