Senate bill would help graduates pay back their loans

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Senate bill would help graduates pay back their loans
Story by Lauren Russell | February 13, 2009
Montana Kaimin

When Molly Morgan graduated from Montana State University-Billings last spring, she thought she’d left working as a barista behind.
But seven months and several part time jobs later, Morgan is once again working at City Brew in Billings, a job she held as a high school student.
After trying to find more permanent employment, Morgan couldn’t afford to keep looking for a job that would make use of her psychology degree; she had bills to pay. Morgan owes $22,125 in student loan debt.
“Luckily my mom lets me live at her house for $100 a month,” Morgan said. “I’ve been able to get a lot of my loans deferred because I can’t afford to pay them, but I’m considering going back to school to defer my payments even longer.”

Morgan’s situation isn’t unique. According to the Montana Guaranteed Student Loan Program, about 70 percent of graduates of the Montana University System have loans when they graduate. Montana’s wages, among the lowest in the country, force some grads to leave the state to find work that will help them pay off their loans.
This Friday, the Senate Taxation Committee will hear testimony on a bill that could give graduates an incentive to stay in the state by giving employers a tax credit for helping their employees pay off their student loans.

Senate Bill 304, the “keep our kids here tax credit,” is sponsored by Sen. Roy Brown, R-Billings, and would give an employer a tax cut equal to the amount he or she contributes to a qualifying employee’s student loan debt, as much as $5,000 a year for up to three years per employee.
The bill would help Brown, who ran against Gov. Brian Schweitzer last November, fulfill his campaign promise to use state resources to keep Montana graduates in the state.

To qualify, an employee would need to have earned a degree from a two- or four-year Montana college in 2009 or later and be employed at his or her job an average of 32 hours per week for at least nine months during the tax year.
“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,” Brown said. “The way I see it, this bill would be a win-win situation for all: It helps the tax liability for small businesses, helps students pay off loans and keeps students in Montana.”
Proponents of the bill include ASUM lobbyist Lucas Hamilton, who will testify Friday.
“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,” Hamilton said. He said that though about 70 percent of graduates from Montana schools remain in the state after graduation, many are not necessarily working in their degree field.
“This bill is tailored to provide a direct stimulus into the economy so students can get directly into the economy in their chosen field and start building a life in Montana,” Hamilton said.

The problem, though, is that any new legislation that isn’t in the governor’s budget faces an uphill battle in what the governor calls a “belt-tightening legislative session.” Depending on how many employers would claim the credit, the bill could cost the state anywhere from $4 million to $38 million in income tax revenue over a three-year period.
Brown has said that, because Montana is expected to receive federal stimulus money, the state can afford to finance a few tax cuts from its general fund, though most of the stimulus money is likely to be earmarked for specific projects. Brown said that by giving graduates an incentive to work in Montana, the state’s economy will benefit.
“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,” he said.

The bill has appeal for Morgan, as well as graduates like Amanda Kelly, who graduated from UM last May and works at the University Center’s Shipping Express. They only wish it had come along sooner.
Kelly, who was born and raised in Montana, began paying her loans off in December and will be paying about $200 a month on her total debt of $16,000 until 2016. Though she wouldn’t qualify for the bill, she supports it as an incentive for other students who want to stay in Montana.
“This bill would have paid my entire debt,” Kelly said. “If you’re staying in Montana, you can’t expect to be making thousands of dollars anyway, and if this bill meant taking a lower- paying job but not having to pay that $200 a month, which could go toward something else, then it’s totally worth it.”