Student debt can seem like a boulder on the shoulders of those who carry it well into their post-school lives. But HF1234 may provide a pickax to chip away at that daunting rock.
Sponsored by Rep. Jamie Becker-Finn (DFL-Roseville), it would change the state’s student loan tax credit from nonrefundable to refundable. That means if the amount of the credit is larger than the tax you owe, you receive a refund.
The bill would also eliminate a penalty for those who are married and filing jointly, thus decreasing their tax burden or increasing their refund.
It was laid over by the House Taxes Committee Tuesday for possible omnibus bill inclusion. The companion, SF1400, sponsored by Sen. Jason Isaacson (DFL-Shoreview), awaits action by the Senate Taxes Committee.
“Students into their 30s, 40s and 50s are carrying student loans and it’s having an impact on their ability to buy homes and afford child care,” Becker-Finn said. “This would only be refundable up to $500. According to the Department of Revenue, about 14,700 returns would be impacted, with an average of $315 returned to the taxpayer.”
The Revenue Department estimates the change would cost the General Fund $4.6 million in fiscal year 2022, and rise by $100,000 each subsequent fiscal year through 2025.
“If other things go well at the federal level, the cost to the state could be lower,” Becker-Finn added, speaking of potential federal tax relief for student loan payers.