Tax relief to take bite out of tuition

"MN Legislature"

01/11/2007

Addressing the rising costs of higher education, lawmakers are poised to pass a measure allowing deductions for low- and middle-income families.


By Norman Draper,
Star Tribune
Last update: January 10, 2007 – 11:40 PM


The high price of college is getting swift attention at the Capitol this year.

With the 2007 session only a week old, the state Legislature is already moving to spotlight the burdens of college costs and do something about it.

The House is acting first. Today, representatives are expected to pass a plan to allow about 110,000 low- and middle-income taxpayers to deduct college tuition costs from their income taxes. The Senate is expected to take action next week.

The deductions could result in $165 in savings for the average Minnesota family with kids in college, estimated Rep. Ann Lenczewski, DFL-Bloomington, chairwoman of the House Taxes Committee.

Further evidence that the Legislature is serious about reining in high college costs came from the House Higher Education and Workforce Development Policy and Finance Division Committee, which is devoting its first several meetings to hearing from students.

If Wednesday's meeting is any indication, the students will focus on skyrocketing tuition and crushing college debt. During the past 10 years, tuition has risen 111 percent at the University of Minnesota and 106 percent at the two-year and four-year schools in the Minnesota State Colleges and Universities system.

"I do believe tuition is too high and has surpassed what students can afford," said 24-year-old Karen Bidwell, a second-year student at Mankato's South Central College, and one of four students to testify Wednesday.

Bidwell said she and her husband have accumulated thousands of dollars in college debt. She said her work-study job was cut last spring. That means she will have to take out more loans to stay in school.

Alexandria Technical College student Scott Forno said his college debt now totals $18,000, and will continue to climb as he moves on to a four-year institution of higher learning, then possibly goes on to law school.

"It's just the beginning," Forno said of his debt. He said his textbooks alone for the first semester cost him $750, and leasing a laptop computer required for his course work cost another $750.

Other students talked about fighting to pay the bills and college tuition at the same time, spiraling credit-card debt to pay for books, and putting off college for years because they couldn't afford it. The committee will continue to hear testimony from students in two- and four-year colleges this week and next week.

That testimony comes on top of the earful that candidates got from voters during last fall's election campaign. That has put college costs on the top of many to-do lists at the Capitol.

The tax relief comes in the form of a proposal made by Gov. Tim Pawlenty last week. Legislators are trying to speed through the measure so that most Minnesotans can take advantage of it when filing their 2006 tax returns. The plan, which brings Minnesota law in conformity with new federal tax provisions, would allow families filing jointly and making less than $130,000 to deduct up to $4,000 in college tuition costs. Families filing joint returns and making between $130,000 and $160,000 could deduct up to $2,000.

Tuition deductions will cost the state $18.3 million. The entire tax-cut package is projected to cost $24.2 million. It includes another $5 million in additional tax cuts and provides $1 million to allow teachers who spend their own money on school supplies to continue deducting up to $250 of those costs. That provision affects about 54,000 teachers.

That tuition deduction sounds good to Jerry and Terry Neises of Andover, whose daughter, Stephanie, is piling up $12,000 in annual tuition and room-and-board costs as a freshman at St. Cloud State University.

While the average savings might just be $165, "it's all money," said Jerry Neises, who was unaware of the tax deduction plan. "It's a hardship for us. It's not a terrible hardship because I did put some money away in the past for her. We promised our kid we would pay for her college, and we're going to keep that promise. ...The way costs have gone up, it's just outrageous. We need an educated society. They should be doing everything in their power to make sure kids get a decent education, and financial assistance is going to be a big help to people of all incomes."Considering the multiple years of double-digit tuition increases, this is a small but helpful gesture from the Legislature," said Thomas Bakk, DFL-Cook, and chairman of the Senate Taxes Committee.

Pawlenty spokesman Brian McClung said: "The governor strongly supports quick action on this bill. It's a good sign of bipartisanship in action. We're happy that first bill coming to the governor's desk is a $24 million tax cut."