Student loan debt is a titanic issue with no easy solutions in sight. Numbers from 2018 illustrate the crisis in grave and stark detail: 69 percent of the class of 2018 took out student loans, and they graduated with an average debt load of $29,800. Moreover, their parents took out an average of $35,600 in loans from federal Parent PLUS programs, making the problem even deeper than just college kids in debt.
In fact, new reports note that Americans owe a combined $1.56 trillion in student loan debt, around $521 billion more than they owe on their credit cards. That’s what makes Connecticut’s recent move so bold: the state Senate recently passed Senate Bill No. 72, a bill which will make student loan debt easier to handle thanks to new incentives for companies who hire recent Connecticut college grads.
The bill establishes a tax credit for employers who make payments on their employees’ student loans, assuming those employees are appropriately qualified under the terms of the bill. Qualified employees, at last report, include those who are state residents, have graduated within the last five years, and have refinanced their loans through CHESLA, the Connecticut Higher Education Supplemental Loan Authority.
The bill allows for employers who make payments directly on their employees’ behalf to receive a 50 percent tax credit on those payments, though employers cannot claim credits for more than five taxable years per employee, or for loan payments greater than what an employee would owe in a year.
The Senate passed the bill 27-8 with bipartisan support, though the bill was amended from its original state in a collaborative effort between its originator, Senator Alex Bergstein (D-Greenwich) and Senators James Maroney (D-Milford) and Will Haskell (D-Westport). Bergstein also serves as Senate Chair of the Banking Committee.
Bergstein noted “This bill will recruit and retain young people in Connecticut. It will help build the type of talented workforce that generates more revenue for our state and builds a thriving economy. When students work in Connecticut after graduating from our excellent academic institutions, they are more likely to put down roots, buy a home, and pay taxes. This bill is pro-business and pro-growth and sends a strong signal that we want our students to stay.”
Reports indicate the bill was launched as a means for Connecticut to help prevent the loss of talented college graduates to other states; by opening up tax credits as a means to reward businesses for not only hiring said young people, but also giving said young people a further job benefit, Connecticut employers can become a more attractive prospect to potential hires and maintain their ability to operate within the state.
It’s also expected to provide knock-on effects like increased home ownership. The Connecticut Realtors organization offered public testimony in support of the bill, expressing concern over the average seven-year delay in first-time home ownership due to outstanding student debt. With the bill, Connecticut Realtors noted, the chance that Connecticut would be seen as a “leader” in addressing student debt would improve.