Committee hears bill with suggestion to alleviate student debt

Refundable tax credit program used in Maine proposed in Minnesota

A bill that would allow graduates from two and four year higher education institutions to receive a tax credit to pay back subsidized student loans is being heard by the House and Senate committees this week. Sen. David Tomassoni, DFL-Chisholm , and two witnesses, both members of non-profit, non-partisan group Minnesota Public Interest Research Group (MPIRG), went before the Senate Higher Education Budget and Policy Committee Tuesday, presenting a bill called Opportunity Minnesota. Tomassoni said that most college graduates leave college with the equivalent of a mortgage in higher education debt. Both witnesses acknowledged economic burdens the bill could place on the state budget in a time when every penny counts, but said that benefits far outweigh possible risks. Ryan Kennedy, University of Minnesota Senior and MPIRG member, said despite possible budget concerns, the bill is moving quickly. Committee members expressed very few concerns about language and intent of the bill. âÄúIâÄôm not sure what kind of effect [the bill] is going to have on the economy in the near future,âÄù Tomassoni said at the meeting, âÄúbut anything we can do to alleviate that problem is something we should try.âÄù To receive the credit, graduates would have to be employed and live in the state of Minnesota for a minimum of eight years. As long as they are living and working in the state, they will receive a tax credit equivalent to the amount the student is supposed to pay that year, witnesses told the committee. A cap is set that is close to the equivalent of tuition at a public university. The graduate receiving the credit must also not earn more than $75,000 per year. The credit could not be used toward credit card debt, nor any other type of debt incurred during college. This bill is modeled after a bill that passed in Maine in 2007, called Opportunity Maine. âÄúItâÄôs allowing them to start contributing to the economy sooner,âÄù said Kennedy in his testimony Tuesday. âÄúItâÄôs allowing them to not have to put off decisions that they would not otherwise be making, like buying a house, getting married, taking a job they really want to do âÄî not one that pays more money that they donâÄôt necessarily want to do.âÄù If the bill were passed this legislative session, current college juniors could apply the credit to subsidized student loans taken out in their senior year. Executive Director of MPIRG Josh Winters said the program in Maine is projected to start paying for itself by year three. Winters also said that the students working to pass this legislation were not expecting an immediate benefit for themselves. âÄúThe students do it because they want future generations of students to enjoy a higher education,âÄù Winters said. âÄúIt creates better incentives for people to get a higher education that perhaps otherwise wouldnâÄôt and provide some relief from the debt burden that is very real for students that graduate from school in these economic times.âÄù An economic impact analysis of Opportunity Maine predicted that the program would âÄúcreateâÄù 21,801 more degree earners over 10 years. The bill was laid over pending language clarification, and will go before House and Senate committees Thursday.