A program that promises great things for Maine’s economic future kicked off with the start of the spring college semester. Thanks to a legislative initiative approved last year, college students who incur education loan debt dating from January 2008 will be able to claim a tax credit for loan repayments. The program, operated by the nonprofit Opportunity Maine, is open to those who began college earlier than January, as well as those who will attend in the years to come.

There is one catch: to be eligible for the tax credit, the graduate must live and pay income tax in Maine. In addition to residents, those from out of state who attend and graduate public or private college in Maine and then get a job here are eligible.

The average annual tax credit benefit will be $2,100, but it can be as high as $5,500. For some, that benefit may cover the entire annual cost of repaying student loans, Opportunity Maine executive director Rob Brown said. The graduate must make the monthly loan payments, but the tax credit is like a rebate, not merely a tax deduction which would only reduce the amount of income tax owed.

While the program’s benefits for students are clear, there is an even greater dividend for Maine’s economy.

Based on lots of research, Mr. Brown and Philip Trostel, an economics professor at UMaine’s Margaret Chase Smith Policy Center and School of Economics, believe they have solved the chicken and egg dilemma when it comes to education and economic development. States with a higher percentage of college grads have jobs that pay higher salaries. And there is clear evidence, they say, that college-educated workers come first.

“The jobs that are created are those that match the skills of the [existing] work force,” Mr. Brown said.

That cause and effect relationship is a profound truth, which should inform the state’s economic development and education strategies.

In the 1970s, when millions of baby boomers graduated college and began looking for jobs, some feared the “college premium,” or economic value of the degree, would shrink. Not so, the men say. The GI Bill, which also unleashed a then-unprecedented number of college grads on the work force after World War II, similarly created better jobs, Mr. Brown said.

The commonly held belief that young Mainers get degrees and leave the state for greener employment pastures is too simplistic to be accurate. Professor Trostel explains that while some Mainers earn degrees and leave, others with degrees relocate here. As long as there is a net increase of graduates living in Maine each year, the economy will improve. The college loan tax credit will increase that net number, they believe, and may even lure graduates from other states.

Eventually, they believe, businesses will see the value of the program and offer student loan repayment as an employment benefit. The businesses could then claim the tax credit.

Present college students, and those considering college, should visit the Web site opportunitymaine.org for information.