Student loan tax credits could keep graduates in Michigan
Some are skeptical of the cost to the state, however.
LANSING — A bill to provide tuition tax credits for people paying off student loans is designed to keep young graduates in Michigan, but not everyone is convinced the plan will work.
Sen. Curtis Hertel Jr., an East Lansing Democrat, has introduced a bill to ease college graduates’ loan burdens for up to five years after graduation if they live and work in Michigan. The bill would give qualifying graduates a tax credit up to 50 percent of the amount paid on student loans — up to $2,150 for an individual, and $4,300 for a married couple per year.
“The governor has talked a lot about talent retention,” Hertel said. “I sat down with some of our major universities, and one of the issues we have is the overwhelming number of students that are leaving the state and not moving into our state.
“For people that are working here, staying here and investing here, we would be able to provide a tax credit for the first five years to try to get them on their feet and try to get them back as part of the economy.”
Keeping young graduates in the state has been a challenge. U.S. Census data from 2013 show 3.5 percent of Michigan’s population ages 22 to 34 with bachelor’s degrees have left Michigan. And 63 percent of Michigan graduates are saddled with debt, owing an average of nearly $30,000, according to the Institute for College Access and Success. That’s the eighth-highest amount owed in the country.
“I think we need to make investments to get students to stay here,” Hertel said. “If we can retain talent, it will help rebuild our economy. And with the crippling debt that students are under, they are under a lot of pressure — I think we can help relieve that pressure, keep students here and invest in Michigan’s economy.”
But Lawrence Sych, a professor of political science and public administration at Central Michigan University, said he isn’t sure if the tax credit would be enough to keep students from leaving Michigan if there aren’t jobs for them.
“Maybe the ones with the biggest debt would be persuaded to stay,” Sych said. “I think on the margin, probably not a lot of people (would stay), depending on the nature of the job offer out of state, advancement, whether they like the sun versus the winter — there are a lot of factors.”
Sych said the credit might be very meaningful to people who decide to stay in the state, but said a lot of students he talks to have accepted the fact they more than likely are going to be looking for jobs out of state, given how bad the job climate has been in Michigan.
Val Meyers, associate director in the office of financial aid at Michigan State University, agreed that while Hertel’s bill would be a great thing for graduates who are able to find a job in Michigan, those who wanted to stay but couldn’t find a job would remain stuck with their debt. At MSU, 45 percent of 2013-14 seniors graduated with some form of debt, averaging about $26,000.
“This in and of itself is not going to be enough, unless they are also able to find and build jobs for our graduating students,” Meyers said.
Michigan’s unemployment has been high for years but is improving. Recently released numbers for December 2014 show a seasonally unadjusted rate of 5.6 percent, compared with 7.7 percent in 2013.
As far as the bill’s political chances, Sych said there might be fiscally responsible people who support it in principle but don’t think it’s affordable.
Meyers agreed, saying that while the tax credit sounds like a good idea, many will oppose it because of the cost.
“In a way, it’s a good way to spend your money,” Meyers said. “But then you can also say, ‘Well, should we be giving more grants to students while they are in school so it would lower their loan and indebtedness to start with?’”
Hertel said while the budget might be a concern, he hasn’t yet talked to anyone who would necessarily oppose it.
“You have to take into account not just the budget implications but also the economic benefits on the other end,” Hertel said. “So I think that we can prove that we are actually creating jobs and helping our economy by doing this bill, and the financial concerns will be lessened by that.”