Senate Bill to Pay Off Student Loans for Montana Graduates

Student Loan Girl — Tue, 17 Feb 2009 20:21:00 GMT

A new bill facing the Montana Senate would give college graduates an incentive to seek employment in the state by creating a tax credit program for employers who help pay off a portion of graduates’ student loans, reports the Montana Kaimin (“Senate Bill Would Help Graduates Pay Back Their Loans,” Feb. 13, 2009).

Currently about 70 percent of students who attend the Montana University System graduate with student loan debt, according to Montana Guaranteed Student Loan Program, the state’s federal student loan guarantor. Many of those graduates are forced to leave the state to find jobs that pay well enough for them to be able to afford their student loan payments, as Montana’s wages are amongst the lowest in the nation.

“So many of these kids leave college with high student loan debt, and they just don’t have many choices because they have to go somewhere where they can make enough money to repay their loan debt,” says bill sponsor Roy Brown.

Tax Credit Program Includes Significant Incentives

Known as the “Keep Our Kids Here Tax Credit,” Senate bill 304 would offer employers a tax cut that would be equal to the amount employers contribute to a qualified employee’s student loan debt. Montana state graduates could see up to $5,000 of their loans paid off by their employer each year for up to three years.

To qualify, graduates must have completed a degree from a two- or four-year Montana college by 2009 or later and must be employed in the state at least 32 hours per week for nine months or more during the tax year.

“What we hope to do with this bill is to provide an incentive to businesses to hire graduates from Montana’s four-year and two-year institutions to start using resources the state has invested in,” said lobbyist Lucas Hamilton.

Although the bill, which is estimated to cost the state between $4 million and $38 million in tax revenue over a three-year period, faces an uphill battle at a time when the state is poised to make significant budget cuts, Brown says that Montana can afford to support the new program because the state will soon receive federal stimulus money and because his new bill will directly benefit the state’s economy.

He says, “When you put more money in pockets of small businesses, more money in the pockets of employees, and more money into the state of Montana, it’s a good situation for everybody.”

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Senate Bill to Pay Off Student Loans for Montana Graduates