Thanks to rising student loan debt, the American dream of buying a home, starting a family, and earning a good salary is out of the reach of many which is having a long term impact on the economies of states around the country.
Aiming to address that and hopefully make a positive impact, Michigan Senator Curtis Hertel (of the state legislature) proposed two new bills at the start of the 2017 Michigan legislative session. The design was to reduce some of the burden of child care costs which has set parent student loan debtors back considerably. While many people think student loan debt is a young person’s problem, there are millions of older Americans that are struggling with the costs of their student loans and raising a family.
Under Hertel’s first proposal (dubbed Bill 59), graduates of Michigan colleges and universities would be encouraged to remain in the state by providing them with an income tax credit for some of their student debt. The tax credit would amount to 50% of the debt the borrower paid on a student loan during the year. The tax credit is capped however at 20% of the cost of a year at a state school in Michigan which is about $2,300. “Our college graduates are one of the state’s most valuable resources, and we should be doing what we can to keep them here and help them succeed,” Sen. Hertel said when announcing the bills.
The second bill, named Senate Bill 60, would enable families in Michigan that get child and dependent care credit from the federal government in the form of a state tax credit. Some cases would see the tax break doubling for childcare. Under the proposal, families that made under $25,000 would be able to claim 110% while families that earn $65,000 to $100,000 can claim 20% of proposed credit. Those who earn between $25,000 and $40,000 could claim 100% of the credit while those in the $40,000 to $65,000 income range would be able to claim 80%.
There’s no question student loan debt is having an impact on the country beyond typical student borrowers, but over the last few years, the problem has become more pronounced. This past summer, the National Realtors Association and SALT, an online financial literacy program, issued a report in which they found 71% of student loan borrowers who do not own a home think their debt is hurting their ability to become home owners. And a little more than half predict the debt will prevent them from buying a home for over five years. The study found borrowers between the ages of 26 to 35 with loans totaling $70,000 to $100,000 were the most likely to say their debt is hurting their dream of homeownership and thus the American Dream.
Author: Andrew Rombach
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