A Colorado state representative proposed legislation that would give some employers tax credits for making student loan payments on behalf of some of their employees. The bill introduced by Rep. KC Becker (D-Boulder) could give qualified workers each up to $10,000 a year in student loan payments from their employers. The employer gets a tax credit equal to 50% of the loan payments (so $5,000 on a $10,000 payment), up to $200,000 total per tax year.
Those qualified workers come from a limited pool of graduates. If you want your employer to make some of your loan payments under this proposed bill, you’d need to have an associate’s or bachelor’s degree in a science, technology, engineering or mathematics field (STEM) from a Colorado college or university, graduated no earlier than Dec. 31, 2010, make less than $60,000 a year and have a STEM-related job. Of course, you’d need to work for an employer in Colorado, as well. The credit applies only to new hires who are retained for at least 12 months.
The bill is one of several workforce-development bills progressing through the state’s legislature, focusing on attracting and retaining educated, talented Colorado workers. One way to look at the employer tax credit is as a good deal for everyone involved.
“It’s good for employers because it gives them a competitive advantage for attracting new workers,” said Patrick Pratt, program manager of the Colorado Manufacturing Initiative at the Colorado Association of Commerce & Industry (CACI). “It’s good for employees because it helps alleviate their student loan burden, as well.”
And then there’s the state of Colorado, which gets to hold on to graduates whose skills are in high demand. One of CACI’s missions is to increase the number of skilled, educated workers in the state, and this proposal aligns with some of those goals.
The average monthly student loan payment in this program is estimated to be $224, totaling $2,688 a year, according to Pratt, which is well under the $10,000-per-employee limit. That means workers who qualify for this program may not have to make student loan payments out of their own pockets for as long as the program continues, if the bill becomes law. It still has a long way to go in the legislative process, but if it is approved as is, the program would run from Jan. 1, 2016 through Dec. 31, 2019.
In a small survey sent from CACI to its manufacturing members, most respondents said they had a favorable opinion of the legislation. (Pratt sent the survey to 400 members, and about 30 responded.)
Only one person who had a negative opinion of the bill explained why: “This is a solution that exacerbates the problem,” Pratt quoted from the survey response. He said the comment went on to say that the problem was the high cost of education.
The average student loan debt of a 2013 graduate from a Colorado college is $24,520, the 16th lowest of the 50 states and the District of Columbia, according to the Project on Student Debt. That’s below the national average ($28,400), but the Colorado default rate is 15.3%, higher than the 13.7% national average. Default can seriously damage borrowers’ credit for years, not to mention the hardship that comes with wage garnishment and debt collection, as a result of default. If you want to get an overview of how your student loans are affecting your credit, you can see your free credit report summary on Credit.com.
More on Student Loans:
- How Student Loans Can Impact Your Credit
- Can You Get Your Student Loans Forgiven?
- Strategies for Paying Off Student Loan Debt