Student Loan Tax Credit
Debated
The Senate Finance Committee heard testimony from Senator
Curtis Hertel, Jr. (D-East Lansing) on Tuesday regarding Student Credit Loans. The
Senator’s proposal, Senate Bill 57, would allow an individual to claim a
credit against the state’s individual income tax for up to 20 percent of the
average yearly tuition for amounts paid on state or federal student loans. This
would be applicable only to graduates for the first five years post-grad, and would
require the individual be a resident of and employed in Michigan.
Employers may also be eligible for a Corporate Income Tax
credit under this legislation. This tax credit would amount to 50 percent of
the amount of payments made by the employer on a qualified student loan on
behalf of a qualified employee (postsecondary graduate) during the tax year, or
20 percent of the average yearly tuition for Michigan’s public universities per
employee, whichever is less.
In his presentation, Senator Hertel called attention to
the average debt for 2013 Michigan college graduate, which is more than $29,000
– a 2 percent increase from the prior year. In addition, 37 percent of recent
graduates have chosen to leave the state for opportunities elsewhere. In this
current situation, half of the 63 percent of college graduates who are still
living in Michigan likely have some form of student debt. Senator Hertel is
hopeful SB 57 can address both financial concerns
of recent graduates and keep more of them in the state.
The Department of Treasury and Senator Marty Knollenberg
(R-Troy) both expressed concern over the tax credit idea. Other members of the Committee
questioned whether the tax credit will truly help students remain in the state
or if the fault lies with inopportunity from employers.
The Committee did not take a vote on the proposal,
stating that it needed more adjustments. Senator Jack Brandenburg (R-Harrison
Township), Chairman of the Committee, commented that he is open to all ideas to
fix these issues and looks forward to seeing what progresses from here.
Principal Resident
Exemption Measure Passed
The Senate Finance panel also heard testimony on Senate Bill 81, ultimately passing the measure to
the Senate floor in unanimous fashion. The bill, sponsored by Committee
Chairman Brandenburg, allows lending institutions to maintain the tax benefits
of a principal residence exemption on a property for two years when the lending
institution takes ownership of the home due to foreclosure.
Proponents of the measure, including the Michigan Credit
Union League and the Michigan Realtors described that maintaining the
exemptions will make it easier on prospective purchasers to qualify for
mortgages and move the foreclosed homes away from the institution’s ownership quicker.
The Department of Treasury and organizations representing
public school groups were opposed to the measure claiming the proposal will
result in significant lost revenue to the State School Aid Fund.