Lawmakers question cost of college loan tax credits
Minnesota lawmakers are considering ways to provide some tax relief for people paying college loans, but there are big questions about how much they can afford.
Members of the Senate tax committee heard two bills Thursday that would provide refundable credits for eligible education loan payments.
Sen. Jeremy Miller, R-Winona, is the chief sponsor of a bill that creates credits of up to $1,000 for individuals and $2,000 for married joint filers.
“It’s a really important issue,” Miller said. “It’s a bipartisan issue here in the Legislature. We need to do something to address the high levels of debt as a result of student loans.”
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The same proposal was included in last year’s vetoed omnibus tax bill. But its estimated cost has grown significantly since then. A revised Department of Revenue analysis shows the two-year cost has increased from $75 million to $122 million.
The committee also discussed a super-size version.
Sen. Greg Clausen, DFL-Apple Valley, is proposing credits of up to $5,000 to individuals or their parents. The estimated two-year cost of his bill is a whopping $1.4 billion.
Clausen said higher education is required for a growing percentage of jobs.
“I think we have to make sure that we are contributing as a Legislature and as a state,” Clausen said.
Clausen said he is open to scaling back his bill.
The tax committee chairman, Sen. Roger Chamberlain, R-Lino Lakes, was caught off guard by the cost. Chamberlain said college debt is a serious problem, but Clausen’s bill is not serious.
“This was simply not an honest attempt to discuss this issue,” Chamberlain said. “It was just not the right way to do this and take the committee’s time. If I had this fiscal note, we wouldn’t have heard this.”
Sen. Ann Rest, DFL-New Hope, reminded Chamberlain that the committee has also spent time on Republican proposals to phase-out the tax on Social Security income that also top $1 billion.