Philadelphia, Pennsylvania – A ground-breaking proposal is on the table to create a state tax deduction for interest paid on student loans in Pennsylvania. House Bill 219, sponsored by Rep. Mary Isaacson of Philadelphia, aims to imitate the federal deduction and encourage college graduates to settle down permanently in the state. “Pennsylvania needs to start making itself friendlier to young people,” Isaacson said.
Philadelphia Democrat and Representative Ben Waxman comments
This sentiment surfed a wave of agreement with Philadelphia Democrat and Representative Ben Waxman, who underlined that large corporations within his district struggle to pull in eligible candidates. Supporters believe that a student loan deduction, perceived as a sign of goodwill towards younger generations, would be a nominal sacrifice aligned with federal precedent.
Isaacson emphasized that the money that taxpayers would save would go back into the economy, not to mention the growth they would experience if more young people decided to stay or move to the state after graduation. Keystone Research Center’s senior policy analyst, Diana Polson, revealed that student loan debt in Pennsylvania has seen an exponential growth of four times in two decades, from a figure of $19 billion to a staggering total of $76 billion.
This figure, which Committee Majority Chairman Rep. Steve Samuelson, D-Bethlehem, revealed to be greater than the state’s entire budget, demonstrates that Pennsylvania graduates carry the third-highest debt load in America. This state ranks sixth based on the number of students graduating in debt, with over two million Pennsylvanians accumulating a regular amount in excess of $39,000. Disproportionate debt representation is seen, especially amongst rural students and students of color.
Average household income has increased by merely 13%
Concurrently, a disparity has emerged between escalating tuition fees and stagnant income levels, with the former rising by 47% over the past two decades while the average household income has increased by merely 13%. As a result, an increasing number of students are facing the dire consequences of taking on excessive loans. Consequently, the Commonwealth’s graduates are paying an average of $2,280 annually in interest, which, according to Samuelson, would render a $70 deduction under the proposed bill feasible.
However, some reservations surround the potential impact that such a deduction may have upon the state’s finances, particularly when juxtaposed alongside other tax relief bills under consideration. Representative Keith Greiner, R-Lancaster, a CPA, conceded that it isn’t a flawed bill but remained unconvinced. Greiner contended that “our state’s in trouble financially, and in three years, we definitely have a serious structural deficit.”
Proponents of the bill indicate that the financial viability of the proposal could be sustained by reducing the tax credits granted to large corporations and closing tax loopholes exploited by these organizations. They believe that these avenues would serve as a better source of income than taxing those already buckling under the burden of student loan debt.
Waxman expressed his support for a less convoluted tax code and a crackdown on corporate tax evasion. “I am all in favor of making our tax code less complicated,” he said. “I would love to start with some of the tricks that are used by some of our largest corporations to avoid paying their fair share.”