New legislation from the North Dakota legislature would provide a state income tax credit to student loan borrowers.
House Bill 1365, introduced by Representative Pamela Anderson, D-Fargo, would create an income tax credit for interest payments on higher education student loans. The credit would not be allowed to exceed a taxpayer’s obligation and any credit in excess of the obligation can be carried forward for up to five tax years.
“Student loans can be a big monthly expense,” she said, noting that a tax credit, rather than a deduction, would likely be better for most working graduates to pay off their loans.
Interest on student loans is paid by the Bank of North Dakota and eventually goes into the general state fund. Anderson indicated that the people who pay the interest on the loans would be able to make better use of the dollars, even if the amount that would be credited would not be large.
It remains to be seen whether a bill like this would likely pass the House or the Legislature, especially given current budget cuts, but Anderson has expressed hope that the bill will pass. She also sees it as a way to get students to stay in North Dakota.
“We cannot afford not to help students stay in the state,” she said.
Some tax credits already exist for federal loans that help offset college costs, including for tuition, fees, books, supplies, and equipment. American Opportunity Credit allows a person to claim up to $ 2,500 per student per year for the first four years of study while the student is working on a degree or similar degree. The Lifetime Learning Credit allows someone to claim up to $ 2,000 per student per year for tuition, college or professional fees, as well as books, supplies, and education. equipment needed for the course and to be purchased from the school.