COLUMBUS, Ohio (AP) - A program to give down payment aid to college graduates who stay in Ohio is only slightly more generous than assistance already available to many of those graduates under a different name, raising questions about whether a significant number of new people will sign up.
The "Grants for Grads" program, beginning Monday, has been promoted as an attack on the perennial brain-drain problem in Ohio, a state whose high unemployment rate makes it tough to keep highly educated graduates from flocking to more prosperous cities in other states. But "Grants for Grads" mirrors a current program for first-time home buyers except that the mortgage interest rate paid by recipients will be half a percentage point lower.
Most new college graduates would already meet the income requirements of the program for first-time home buyers. The state is unsure how many graduates will qualify for down payment assistance who otherwise wouldn't have, but it's promoting Grants for Grads as a more favorable program with unique advantages.
"We expect that some of the participants in Grants for Grads will be home buyers who might not otherwise have used OHFA programs for mortgage financing," said Ohio Housing Finance Agency spokeswoman Erin Biehl.
The agency's home ownership programs are paid for primarily through the issuance of tax-exempt mortgage revenue bonds.
Like the current program for first-time home buyers, the assistance for graduates will go to households whose income doesn't exceed 140 percent of the median income in the recipient's local area and the aid will equal 2.5 percent of the purchase price.
The average price of a home bought by a recipient in the existing program this year is just under $90,000, making the down payment assistance about $2,250. So far in 2009, 879 people have been approved for the existing down payment grant, the agency said.
The graduates who qualify for help in the new program will get a 5.5 percent interest rate on their mortgages while those in the traditional program pay a 6 percent rate. Assuming a $100,000 mortgage, participants in the Grants for Grads program will save a total of about $1,905 over the current program over the course of five years of principal and interest payments - or about $32 a month. That amounts to a savings for Grants for Grads recipients - who must agree to stay in Ohio for at least five years - of about 5 percent of what would be paid in the current program.
The marketing of the new program will be crucial in determining whether new graduates are aware of their opportunities.
"If we can get out the message, this will be one more tool, one more thing to say to college grads that 'We need you here in Ohio,' that 'We want you here in our state,"' said state Sen. Steve Buehrer, a Republican whose idea was the blueprint for the program.
Marketing will begin Monday through the media and the housing agency's Web site, and there are plans to do outreach through campus organizations and targeted publications, Biehl said. The current program is marketed through lenders, real estate agents and community events, all of which will also be used for the new program, she said.
Ohio and several other Rust Belt states, particularly Michigan, are prime examples of the brain-drain phenomenon. Ohio has an annual net loss of more than 5,800 bachelor's degree holders and almost 2,900 graduate degree holders.
U.S. Census projections predict a gloomy 20-year trend for residents of prime working age in Ohio, Indiana, Illinois, Michigan and Wisconsin. While the Census expects those states to see a total population growth of roughly 1.5 million by 2030, it predicts the number of residents between the ages of 25 and 44 will decline by about 400,000.
Whether the slight difference in interest rates is enough to keep wandering graduates around remains to be seen. Those who monitor the brain drain phenomenon give credit to Ohio for thinking creatively but also say the best response is to create good-paying jobs.
"When you think of a strategy you have to be considering whether you should be investing in high demand jobs or trying to get people to stay who don't have jobs," said Bruce Vandal, director of post-secondary education and work force development at the Education Commission of the States.
Liza Toher, a 26-year-old doctoral student in electrical computer engineering at The Ohio State University, said the down payment policy "has some merit" but job opportunities come first.
"It is not always obvious that there is the promise of continued successful industry in Ohio," Toher said. "Besides Honda and Procter & Gamble, when it comes to engineering there aren't many big names that people recognize. I don't think Ohio does the best job at highlighting smaller firms and the opportunities there."
---
On the Net:
Education Commission of the States: http://www.ecs.org
Ohio Housing Finance Agency: http://www.ohiohome.org
(Copyright 2009 by The Associated Press. All Rights Reserved.)
