An Act To Create Jobs by Expanding Educational Opportunity for Maine Residents
Maine Legislature, Session 123, LD 1815
Committee: Taxation
Sponsors: ADAMS, FISCHER, WOODBURY, MARTIN, BERRY, CLARK, CLEARY, CUMMINGS, DRISCOLL, DUCHESNE, EATON, FARRINGTON, HAYES, HILL, HINCK, MAZUREK, MOORE, PATRICK, PEOPLES, PERCY, PRATT, RAND, RINES, THERIAULT, WALCOTT, WHEELER, BARTLETT, DOW
Amends: 36 MRSA §5217-D

Legislative Document 
No. ISIS 
H.P. 1267 
House of Representatives, April 3, 2007 
An Act To Create Jobs by Expanding Educational Opportunity for 
Maine Residents 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative ADAMS of Portland. 
11/~/J7.~ 
MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representatives: FISCHER of Presque Isle, WOODBURY of Yarmouth, 
Senator MARRACH::E of Kennebec, Senator MARTIN of Aroostook and 
Representatives: BERRY of Bowdoinham, CLARK of Millinocket, CLEARY of Houlton, 
Speaker CUMMINGS of Portland, DRISCOLL of Westbrook, DUCHESNE of Hudson, 
EATON of Sullivan, FARRINGTON of Gorham, HAYES of Buckfield, HILL of York, 
HINCK of Portland, MAZUREK of Rockland, MOORE of Standish, PATRICK of Rumford, 
PEOPLES of Westbrook, PERCY of Phippsburg, PRATT of Eddington, RAND of Portland, 
RINES of Wiscasset, THERIAULT of Madawaska, WALCOTT of Lewiston, WEDDEll.. of 
Frankfort, WHEELER of Kittery, Senators: BARTLETT of Cumberland, DOW of Lincoln. 
Prinrro un recycletJ paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 20-A MRSA c. 428-C is enacted to read: 
CHAPTER 428-C 
JOB CREATION THROUGH EDUCATIONAL OPPORTUNITY 
PROGRAM 
§12541. Definitions 
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings. 
1. Accredited Maine junior college, college or university. "Accredited Maine 
junior college, college or university" means: 
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A. A campus of the Maine Community College System; 
B. A campus of the University of Maine System; 
C. The Maine Maritime Academy; 
D. An educational institution in the State that has authorization to confer an associate 
degree or a bachelor's degree, in accordance with sections 10704 and 10704-A; 
E. An educational institution in the State that is exempted from chapter 409 under 
section 10708, subsection 1 or 2; or 
F. An educational institution in the State that is operating under a certificate of 
temporary approval from the state board under section 10703. 
2. 
Benchmark loan payment. "Benchmark loan payment" means the amount 
described in section 12542, subsection 2, paragraph C. 
3. Educational institution. "Educational institution" has the same meaning as in 
section 10701, subsection 3. 
4. Educational oDDortunitv tax credit. "Educational opportunity tax credit" means 
the tax credit provided for in Title 36, section 5217-D. 
5. Opportunity contract. "Opportunity contract" means the contract developed by 
the state board pursuant to section 12542, subsection 3. 
6. 
Principal cap. 
"Principal cap" means the cap described In section 12542, 
subsection 2. 
7. Resident. "Resident" means a person who qualifies for residence in this State 
under Title 21-A, section 112. 
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§12542. Job Creation Through Educational Opportunity Program 
1. 
Establishment; goals. 
The Job Creation Through Educational Opportunity 
Program, referred to in this chapter as "the program," is established to reimburse 
residents for education-related costs if they agree to live, work and pay taxes in this State 
after being graduated from college. The program is designed to achieve the following 
goals: 
A. Promote economic opportunity and a highly skilled workforce in the State by 
increasing enrollment in Maine's institutions of higher education; 
B. Bring more and higher-paying jobs to this State by increasing the skill level of 
this State's workforce; 
C. Offer educational opportunity and retraining to individuals affected by job loss, 
workplace injury, disability or other hardship; 
D. 
Keep young people in this State through incentives for educational opportunity 
and creation of more high-paying jobs; and 
E. 
Accomplish all of the goals in this subsection with as little bureaucracy as 
possible. 
2. Principal cap. The principal cap limits the loan principal that can serve as the 
basis for a claim of the educational opportunity tax credit. The cap is based on in-state 
tuition and mandatorv fees for either the Maine Community College System or the 
University of Maine System, depending on whether the opportunity contract is for pursuit 
of an assoc iate degree or a bachelor's degree. 
A. 
After an individual has earned a degree from the Maine Community College 
System or from the University of Maine System, the financial aid office shall certify 
whether or not the total principal of loans the individual received as part of that 
individual's financial aid package exceeds the cost of in-state tuition and mandatory 
fees that the individual incurred in pursuit of the degree. That cost constitutes the 
principal cap for that individual. 
B. After an individual has earned a degree from an accredited Maine junior college, 
college or university other than the Maine Community College System or the 
University of Maine System, the financial aid office shall certify whether or not the 
total principal of loans the individual received as part of that individual's financial aid 
package exceeds the published in-state tuition and mandatory fees for full-time 
enrollment in the Maine Community College System or in the University of Maine 
System, depending on whether the degree is an associate degree or a bachelor's 
degree, during the relevant years. The published in-state tuition and mandatory fees 
constitute the principal cap for that individual. If the individual has not attended full 
time throughout the pursuit of that individual's degree, an appropriate principal cap 
must be determined in a manner consistent with the tax credit limitations in this 
subsection. 
C. For an individual whose student loans exceed the principal cap established in 
paragraph A or B, a benchmark loan payment must be calculated pursuant to this 
paragraph. The financial aid office shall calculate what the monthly payment would 
be on a loan for the amount of the principal cap, to be paid over 10 years, at the 
interest rate offered for federal Stafford loans under 20 United States Code, Section 
1077a, during the individual's Iast year of enrollment. The financial aid office shall 
specify the benchmark loan pa\nent on the individuaI'S.iill.Portunitv CO]]l rae 
3. Opportunity contract. The state board shall draft an opportunitv contract for use 
in enrolling individuals in the program. The. rerms of the opportunity contr(ict must 
require an individual who wishes to participate iT} thL"12:'c.1£ram to..:. 
A. Certify that the individual i a resid~.!:!.t 
B. Agree to attend and to obt. Lit specified de!.(re.,-,-, t :cl1r 211 a~:sl'ciale or bachelor's 
degree, from an accredited Mal ~e junior collL~ :..:ollege or university. The individua; 
need not obtain the degree from the institution in \~bich that individual originally 
enrolled, as long as all course work toward thc~ee is performed at accredited 
Maine junior colleges, colleges or universities; 
C. 
Agree to live in this State while pursuing the degree and, after obtainilH! the 
degree, during any period when that individual seeks to claim the educational 
opportunity tax credit; 
D. 
Agree to maintain records relating to loan payments claimed under the 
educational opportunity tax credit for 5 years after those payments are claimed: and 
E. With respect to educational loans, agree that: 
(1) The individual will claim the educational opportunitY' tax credit only with 
respect to loans that are part of that individual's financial aid package and tha1 
have a term of at least 8 yea~ 
(2) If the individual in any way accelerates repayment, the indivLdual~ ill forfeit 
any right to claim an educational opportunity tax credit for that taxable year or 
any future taxable year; and 
(3) The individual may refinance the loans onlv if they remain separate from 
other debt and if the effect of the refinancing is to decrease both the annual 
repayment and the total remaining indebtedness. 
The contract must provide that, in exchange for the consideration outlined in paragraphs 
B to E, the State agrees to permit the individual to take advantage of the educational 
opportunity tax credit. 
The opportunity contract must contain space for the financial aid office of the accredited 
Maine junior college, college or university to certify that the individual has obtained the 
relevant degree and to certify whether or not the loan principal that the individual 
incurred in pursuing the relevant degree exceeds the principal cap. 
4. Administration. The program must be administered as follows. 
A. A resident who gains admission to an accredited Maine junior college, college or 
university and who receives financial aid in the form of loans must have the 
opportunity to participate in the program. The financial aid office of the relevant 
institution shall offer to the individual the chance to sign an opportunity contract with 
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the State. The financial aid office shall retain the opportunity contract until the 
individual obtains the degree. 
B. 
After the individual obtains the degree, the individual shall specify on the 
opportunity contract the source, principal amount, interest rate and term of any loans 
that are part of the individual's financial aid package. The financial aid office shall 
certify on the opportunity contract that the individual has obtained the relevant 
degree, whether the individual's loans exceed the principal cap and, if appropriate, 
what the benchmark loan payment is. The individual shall then file the opportunity 
contract with the Secretary of State. Every accredited Maine junior college, college 
and university shall develop procedures to facilitate this process, in consultation with 
the Secretary of State. 
C. When the individual files the opportunity contract with the Secretary of State 
pursuant to paragraph B, that individual becomes eligible to claim the educational 
opportunity tax credit, subject to the requirements of this chapter and of Title 36, 
section 5217-0. The individual may thereafter take advantage of any forbearance or 
deferment provisions in the loan agreements without forfeiting the right to claim the 
educational opportunity tax credit when the individual resumes repayment. 
5. 
Effective date; participation by individual already enrolled in degree 
program. The program must commence for the first semester that begins after the 
effective date of this chapter. Residents who when the program commences are enrolled 
in an associate or a bachelor's degree program at an accredited Maine junior college, 
college or university before the effective date of this chapter may participate, subject to 
the same essential terms as apply to other program participants. When such an individual 
obtains the relevant degree, it must be specified in the individual's opportunity contract 
what percentage of the course work completed in pursuit of the degree was performed 
while the individual was participating in the program. The principal cap and benchmark 
loan pavment must be calculated as otherwise provided in this chapter, but the individual 
must then apply the percentage calculated pursuant to this subsection to actual payments 
or to the benchmark loan payment, whichever applies, in determining the amount the 
individual may claim under the educational opportunity tax credit for a given year. 
§12543. Effect on funding of higher education 
It is the intent of the Legislature that neither the existence of the program nor the 
benefits provided under the educational opportunity tax credit serve as justification to 
decrease other funds appropriated or allocated to accredited Maine junior colleges, 
colleges or universities or to other higher education programs. 
§12544. Rules 
The state board shall, in accordance with section 3, adopt rules, which are routine 
technical rules pursuant to Title 5, chapter 375, subchapter 2-A, as necessary to carry out 
the purposes ofthis chapter. 
Sec. 2. 36 MRSA §5217-D is enacted to read: 
§S217-D. Credit for educational opportunity 
1. Definitions. As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A. 
"Benchmark loan payment" has the same meanIng as In Title 20-A, section 
12541, subsection 2. 
B. "Employer" has the same meaning as the term "employing unit," as defined in 
Title 26, section 1043, subsection 10. 
C. "Full-time employment" means employment with a normal workweek of 32 hours 
or more. 
D. "Independent contractor" has the same meaning as in Title 39-A, section 102, 
subsection 13. 
E. "Opportunity contract" means the contract described in Title 20-A, section 12542, 
subsection 3. 
F. 
"Opportunity program participant" means an individual who enters into an 
opportunity contract with the State, obtains the specified degree and complies with 
the requirements under Title 20-A, section 12542, subsections 3 to 5. 
G. "Part-time employment" means employment with a normal workweek of between 
and 32 hours. 
H. 
"Qualified employee" means an emplovee or independent contractor who is 
eligible for a tax credit under this section and who is employed at least part-time or 
performs services as an independent contractor at least 16 hours per week. 
I. "Resident individual" has the same meaning as in section 5102, subsection 5. 
J. "Seasonal employment" means employment in a seasonal industry, as defined in 
Title 26, section 1251 and in rules adopted under that section. 
K. 
"Term of employment" includes all months when the individual is actually 
employed. It includes time periods when an individual is on leave or vacation. It 
extends to the full year for individuals working for employers who customarily 
operate only during a regularly recurring period of 9 months or more in a calendar 
year. For individuals working for employers who customarily operate only during 
regularly recurring periods of less than 9 months in a calendar year, including 
seasonal employment, the term of employment extends only to time periods when the 
individual is actually working. 
2. Credit allowed. A taxpayer that is an opportunity program participant or an 
employer of a qualified employee is allowed a credit against the tax imposed by this Part 
for each taxable year under the terms established in this section. The credit is created to 
implement the Job Creation Through Educational Opportunity Program established under 
Title 20-A, chapter 428-C. 
The credit may not reduce the tax otherwise due under this Part to less than zero. A 
taxpayer entitled to the credit for any taxable year may carry over and apply to the tax 
liability for anyone or more of the next succeeding 10 years the portion, as reduced from 
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year to year, of any unused credits. More than one taxpayer may claim a credit based on 
loan payments actually made to a lender to benefit a single opportunity program 
participant, but 2 taxpayers may not claim the credit based on the same payment. 
3. Calculation of credit. The following provisions govern the calculation of the 
credit in this section. 
A. If the opportunity program participant's opportunity contract limits the amount of 
the credit to a benchmark loan payment and the opportunity program participant's 
actual monthly payment due is higher than that amount, then the credit claimed may 
not exceed the product of the benchmark loan payment and the number of months in 
which the taxpayer made loan payments. 
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B. If the opportunity program participant's opportunity contract certifies that the 
principal for the loans is at or below the level of the principal cap, or if the 
opportunity program participant's actual monthly payment is below the benchmark 
loan payment, the taxpayer may claim a credit based only on regularly scheduled loan 
payments actually made. 
C. If the credit is claimed on behalf of an individual who was already enrolled in an 
associate or a bachelor's degree program at an accredited Maine junior college, 
college or university, as defined in Title 20-A, section 12541, subsection I, on the 
commencement of the Job Creation Through Educational Opportunity Program under 
Title 20-A, chapter 428-C, the percentage figure listed in the opportunity contract, as 
determined pursuant to Title 20-A, section 12542, subsection 5, must be multiplied 
by the amount determined under paragraph A or B. 
4. 
Conditions for oDDortunitv DrO!!ram participant claiming credit. 
An 
opportunity program participant may claim the credit only if the participant is a resident 
individual. The participant may claim the credit based only on regular payments made 
during months in which the individual was working for an employer located in this State. 
A married couple filing jointly under Title 36, section 5221 may claim the credit only to 
the extent that the spouse on whose behalfthe credit is claimed meets these requirements. 
5. Conditions for employer claiming credit. A taxpayer that is an employer may 
claim the credit under this section under the following circumstances. The employer may 
make partial or full loan payments directly to the lender on behalf of a qualified 
employee, after taking reasonable steps to ascertain that the employee or independent 
contractor is in fact a qualified employee, and may claim a credit based on amounts that 
came due and were paid by the employer during the term of employment. An employer 
who claims the credit under this section shall retain for 5 years any proof of eligibility 
that the employee or independent contractor provides. 
The employer may claim a credit for the amount that the qualified employee could have 
claimed during any months when the qualified employee was employed had the qualified 
employee made the partial or full loan payments instead, under conditions in which the 
qualified employee had sufficient income to claim the full credit for the taxable year. If 
the qualified employee is employed or performs services as an independent contractor 
only on a part-time basis, the employer may claim a credit only up to half of the total that 
the qualified employee could have claimed had the qualified employee made all payments 
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and earned sufficient income to claim the full credit for the taxable year, but the amount 
the employer claims must still be based on amounts actually paid. 
An employer claiming this credit on behalf of a qualified employee for a taxable year 
may not simultaneously claim a credit under section 5219-V on behalf of the same 
employee. 
SUMMARY 
This bill provides a tax credit to reimburse educational loan payments for a Maine 
resident who earns an associate degree or a bachelor's degree in Maine and lives, works 
and pays taxes in Maine after earning that degree. Under an agreement with the State, a 
Maine resident who obtains an associate degree or a bachelor's degree from an accredited 
Maine junior college, college or university may take advantage of the credit. A person 
who qualifies may claim the credit for payments made during each year the person lives 
and works in Maine. In addition, the qualified person's employer, or, if the qualified 
person is an independent contractor, the entity contracting with that qualified person, may 
make the loan payments and claim the credit. The credit is limited to what the person 
actually pays in loan payments or to the amount that would be necessary to pay for an 
education in the University of Maine System or Maine Community College System, 
whichever is less.