Some of the knocks on student loans are the debt can never be discharged, the interest rate can’t be written off, and the government can garnish wages and other benefits if federal loans aren’t repaid. All of that creates a tough situation for countless borrowers around the country, but Maryland Governor Larry Hogan is aiming to fix that.
Last week, Hogan proposed that interest on student loans become tax deductible, similar to how homeowners can write down their mortgage interest. Additionally, he proposed a cap on the rate at which colleges and universities in the state can raise tuition to 2%. These moves are designed to alleviate the financial burden that is often associated with earning a college degree. When Hogan announced the proposal, he claimed that student loans often influence many young people into giving up their dream of a college education. By Hogan’s count, close to 60% of college students in Maryland are graduating with more than $27,000 in student loan debt.
Dubbed the 2017 Student Debt and Tuition Relief Initiative, under Hogan’s proposal student debt interest payments would be tax-deductible for all residents of Maryland who earn less than $200,000 a year. In addition to the cap on tuition increases, the proposal also includes investments in high priority projects at higher education institutions in the state. “Having a college education is more important now than ever before, but the harsh reality many face today is that earning a college degree often goes hand-in-hand with accumulating crippling college debt,” said Hogan in a release announcing the initiative.
This isn’t the first time Hogan has tried to make a college education more affordable for students and to reduce some of the hardships caused by student loan debt. In 2015, his administration created a mortgage initiative aimed at Marylanders with $25,000 or more in student debt. That program resulted in $90 million in new mortgages. Last year it rolled out the SmartBuy program in which eligible buyers can purchase homes and at the same time eliminate their student loan debt.
Student loan debt is resulting in a dearth of homeownership among millennials, and it is impacting many aspects of a borrower’s financial health. It is no wonder that programs designed to stimulate homeownership while tacking student loan debt are being discussed today.
Author: Dave Rathmanner
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