Tax credits for student debt

A bill would give Minnesota students up to $4,000 a year to pay back loan debt.

by Daily Editorial Board

The Minnesota Legislature recently introduced a bill that would provide up to a $4,000 tax credit to Minnesotans repaying student loan debt. The credit, titled the Education Opportunity Credit, would provide refundable tax credits for all individuals who pay debts on qualified student loans who graduated from Minnesota nonprofit colleges and universities. It is means tested and scales back at a ratio of $9 to $1 for incomes above $39,000 for an individual and $58,500 for a household.

Although it is not refundable for employers, there is no limit for the number of credits an employer can claim and is also not means tested against revenues or profits. Of note, the proposed credit is bigger — $4,000 versus $2,500 — than the federal tax credit and fully refundable instead of capped at $1,000.

Among the authors of the Minnesota Senate version of the bill is state Sen. Kari Diedzic, who represents much of the University community.

With bipartisan support, this measure is one that legislative leadership and the governor should consider: Although it does little to address the underlying symptoms that have resulted in skyrocketing college tuition costs, it provides immediate relief for recent graduates.

This proposal shifts much of the debt burden from individual students to the state, which provides a strong budgetary incentive for the Legislature to solve the problem of the cost of higher education to avoid paying the additional costs incurred through interest on student debt. Students of any political persuasion who wish to see the credit enacted should contact their legislators and lobby them to support it.