Amid a state budget surplus, Gov. Mark Dayton signed a proposal Friday that includes tax breaks for more than 1.2 million Minnesotans, including current college students and recent graduates.
The bill, which passed the state House and Senate earlier this month, provides up to $190 per year for more than 285,000 college graduates by deducting their student loan interest. Additionally, 40,000 current students and parents will get tuition deductions of $140 per year on average.
“I think that students have been put into extremely unfair situations by older generations for the cost of college and the lack of resources to pay for it,” Dayton said in a March 13 conference call. “But I feel that we’ve made some good progress.”
Despite the tax breaks, many say the state should consider additional ways to help students finance their higher education. Hamline University professor David Schultz said state leaders should instead look at creating more loan forgiveness programs to help students pay for college.
“The current tax cuts are helpful, but certainly I don’t think they are going to help current students or recent graduates as much as perhaps some options would,” he said.
House Speaker Paul Thissen, DFL-Minneapolis, agreed. He and said while the bill has many benefits overall, students would benefit more if there was more funding allocated for Minnesota’s grant programs.
Still, he said, it’s unique that students are included in the tax breaks alongside married couples, parents, small business owners, educators and other middle-class Americans.
“This is a way to get money into people’s hands in a much more cost-effective way without creating a new program,” Thissen said.
University of Minnesota Humphrey School of Public Affairs professor Larry Jacobs said Dayton may have signed the tax relief bill as a political move, hoping to gain popularity as he seeks re-election.
“I think politicians generally like to be Santa Claus and, in general, like to give tax cuts and give things to people,” Schultz said, noting that providing tax cuts is a typical response to a budget surplus.
Minnesota Student Legislative Coalition Chairman Matt Forstie said the tax breaks for students and recent graduates are significant, but the state should use the extra funding in alternative ways to help students.
“Where we really need to make investments is directly in our higher education institutions and directly in students through things like financial aid,” he said.
In order to easily receive the new tax cuts, it’s best to wait until Monday to file taxes, said Sen. Ann Rest, DFL-New Hope, vice chair of the Senate’s Taxes Committee.
She said the Minnesota Department of Revenue is currently working to ensure that the new tax cuts are implemented smoothly and the department is reviewing returns to assess where changes need to be made. Some Minnesotans who have already filed will have to amend their returns to receive the tax breaks.
Sen. Kari Dziedzic, DFL-Minneapolis, who represents the University area, said that by including students in the tax relief bill, the Legislature is solidifying its commitment to helping higher education.
“Every little bit helps,” she said.