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Tax Credits For Student Loan Payments? A Terrible Idea

The tax bills wending their way through Minnesota’s House and Senate include mostly good (although not very bold) provisions, with a few clinkers mixed in, like the subsidy for shrimp producers. SF 941 is an especially poor idea:

Student Loan Tax Credits | SF 941

Student debt is a major concern for students, graduates, and their families. This bill would allow tax filers to claim a credit for payments on their student loan debt, which could result in net savings of $37.3 million in 2018 and $38.1 million in 2019 for hard-working Minnesota taxpayers.

“A net savings…for hard-working Minnesota taxpayers”? That’s a ridiculous claim. SF 941 effectively forces taxpayers to contribute to the repayment of other people’s student loans. That’s no savings!

The fact that many young people get out of college with huge student debts is a problem. There are multiple solutions, including 1) cheaper tuition, 2) choosing degrees that are likely to lead to gainful employment, and 3) going to a technical or trade school rather than college–a great career path for many young people.
The worst possible “solution” is government subsidies for student loans, the main consequence of which will be to further drive up tuition.

Let’s hope SF 941 doesn’t become part of the final tax package.

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