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May 29, 2019

Senate passes tax credit for CT companies paying employees’ student loans

tax credits student loan debt Photo | Contributed A commencement ceremony at Middlesex Community College.

The Senate late Tuesday night overwhelmingly passed a bill that would create a new tax credit for Connecticut employers that offer student loan repayment assistance.

S.B. 72, which aims to relieve recent graduates from student loan debt and retain the state’s next generation of workers, still needs approval from the House and Gov. Ned Lamont. It creates a tax credit for employers that make payments on their employees’ student loans. Individuals who refinanced their student debt through the Connecticut Higher Education Supplemental Loan Authority would be eligible.

Starting in 2022, each employer that makes loan payments directly to state loan authorities can claim a credit equal to half of the payments they make during any given year.

A qualified employee includes a resident working at least 35 hours per week at a Connecticut company, and who has lived in the state at least five years since graduating college. It also limits employers from claiming credits for loan payments higher than the amount due by the employee in a single year.

If adopted, the bill would offset mounting student loan debt in Connecticut, which more than doubled from 2008 to 2017, increasing from $8 billion to $17 billion over that period, according to Democratic lawmakers.

Connecticut Realtors in February testified in support of the bill saying they back any effort to curb the student debt crisis given its impact on the real estate market.

The association, which represents over 17,000 members, said first-time homebuyers are delayed in making a purchase an average of seven years in large part due to student loan debt.

Sen. Will Haskell, (D) Westport

Sen. Will Haskell (D-Westport), a 22-year-old freshman lawmaker who has advocated for student debt assistance, on Wednesday said the nation’s student debut crisis is at a “breaking point.”

“We need creative solutions for problems like these, and this kind of strategy – which supports both employers and employees – will help,” Haskell said.

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