Sen. Green proposes tuition tax credit for students
Students and families with student dependants would receive the cut.
Feb. 09, 2009
A state senator put forth a bill to make it easier to pay college tuition by making the cost and fees entirely tax deductible for most students and families.
Sen. Timothy Green, D-Florissant, proposed students who file their own tax returns or families who claim college students as dependants and have an income of less than $250,000 should be able to deduct the cost of college or university tuition from that taxed income.
Green proposed similar bills every year for the last three years, but all of those attempts ended in legislative committees. But with even public schools talking about raising tuition costs and the loan industry tightening the amount of credit available for college students in the souring economy, measures such as Green's might get more emphasis.
The bill will soon go before the Governmental Accountability and Fiscal Oversight Committee.
Committee Chairman Chuck Purgason, R-Caulfield, said the committee will look at ways to reduce the amount of money the bill would take from the budget, possibly by changing its eligibility requirements.
"It will be hard to pay for," Purgason said. "We'll bring it up in committee in a week or two and see if we can cut back on the financial impact."
The legislation comes as the state is considering deep cuts to education to balance its budget. The state deficit is projected at $342 million this fiscal year and questions remain about how much aid the state will see from the federal stimulus package, which is expected to be voted on Tuesday in the U.S. Senate.
Tax cuts, even for students, mean less incoming revenue to close that gap, and the state constitution requires the budget be balanced.
Sen. Kurt Schaefer, R-Columbia, said he had not yet seen the bill but the cost could be an equal trade-off for helping students pay for school.
"I'm not opposed to the idea," Schaefer said. "I think we need to help the families who are struggling with tuition."
Calls for such tax breaks are not limited to Missouri.
Third Way, a progressive think tank based in Washington, called in a June 2008 policy brief for families to be a given a $5,000 tuition credit at the federal level for up to four years of post-secondary education.
The report noted the rapid increases in college tuitions during the last 20 years, citing figures from several schools whose costs had more than doubled since 1988.
The highest was UM-St. Louis, which had a 402 percent tuition increase over the past two decades, from $1,410 to $7,077.
Families have two options on the federal level to get tax credits for tuition, either by deducting up to $4,000 in tuition and fees or filing for two-tax credit program.
Third Way Policy Director Jim Kessler said the sharp increases have hit students particularly hard, as a college education has become a more standard requirement for getting a good job. He said Green's bill was a good first step but more still needs to be done.
"For students, college has gone from affordable to priced like a luxury, when it is really a necessity," Kessler said. "We just need a shift in our thinking at both the state level and the federal level."