Tax credits have paved the way to home ownership and helped small businesses get off their feet. Now they can reduce some of the burden of student loan debt if two Minnesota state senators have their way.
Last week Minnesota Senators Matt Little and Greg Clausen introduced legislation that would give some student loan borrowers a tax credit of $5,000, lowering their taxable income. Students or families that make under $94,000 a year or couples that make less than $145,000 combined per year (and file their taxes jointly) would get the $5,000 credit each year. If the income increases, then the size of the tax credit would decrease.
Little, who is still paying off his own student loans said if the bill was passed it would make a “good dent in relieving some of the pressure caused by student loans.” Clausen, Little’s principal when Little attended high school, noted in a press release that the balances of student loan borrowers in their thirties have doubled which impacts the economy as student debt holders put off buying a home, getting married, starting a family, and launching their own small businesses. “I am cautiously optimistic we can finally begin to make some progress and find sound, bipartisan solutions to reducing student loan debt,” Clausen said.
The move on the part of the two senators comes at a time when politicians across the country are trying to come up with new ways to relieve some of the burden of student loan debt. Currently the nation owes $1.3 trillion and that is only expected to rise as the cost of a college degree continues to increase. According to an August report by the Minnesota Office of Higher Education, the median debt for students who received an associate’s degree or certificate was $11,437 in 2015. To put it in perspective, those who graduated from the University of Minnesota had average student loan debt of $22,035.
The government agency also found there has been a “gradual” uptick in the amount of loans borrowers take out to attend state colleges and a “gradual” decrease in the debt owed to private for-profit colleges. The median debt in the state was $27,296 which is below the roughly $31,000 average student loan debt in the nation.
Author: Donna Fuscaldo
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