State May Offer Tax Break to Student Borrowers

State Senator Cheryl A. Jacques (D-Needham) wants Harvard students to stay where they are after graduation, and she hopes a change in the tax laws will help.

The Middlesex Country Democrat has introduced legislation to make interest payments on college loans state-tax deductible. But a year after its introduction the bili finds itself mired in committee and lacking supporters in the House.

"People are paying 40, 50 thousand [dollars] in loans," Jacques says. "It's bad for them and it's bad for the Massachusetts economy. We'd like to keep people from MIT, Harvard--bright graduates--in the state."

Senate Bill 1483 was approved by the Senate earlier this year, but it lacks support in the House of Representatives--a major hurdle, according to Jacques.

Should it pass, Massachusetts would be the first state to offer a tax deduction on student-loan interest, a deduction that would benefit current students and recent graduates.

It would lessen the burden on students, who for the last 15 years have faced tuition increases outstripping rises in the cost of living--increases that have prompted criticism all the way up to Capitol Hill.

"Last year, we gave many tax cuts to mutual aid funds, because we were swamped with calls," Jacques says. "But none of my colleagues report receiving any calls about this [bill]."

Jacques says that without vocal support from constituents, the bill with die from lack of interest.

State Rep. Peter J. Larkin (D-Pittsfield), chair of the House Committee on Taxation, has requested a study to be carried out on the bill. This study has been ongoing for the last six months, and the bill has been stuck in committee ever since.

Eric S. Olney '98, the former head of the Harvard College Democrats, spoke in favor of the bill at the original Senate hearing in May, and says he continues to believe that the bill is "important."

"Harvard does a decent job in terms of financial aid, but there's only so much that they can do," Olney says. "I know plenty of middle-class people who did not get enough aid and [went] elsewhere."

According to Jacques' office, more than 60 percent of college graduates borrow to pay for their education, and graduates of undergraduate institutions average $10,000 in student loans.

In Massachusetts, the average is twice that amount. For students attending private colleges, it is not uncommon to graduate with $40,000 or even $50,000 in student-loan debt.

Jacques says that she supports the legislation because the rising tuition rates have adversely affected recent graduates.

"People can't go to college because they can't afford it. It's a class issue now," she says. "A lot of students aren't making decisions based on what they want, they choose their career path based on income, not merit."

Clinton Bench, chair of the Young Democrats of Massachusetts--which Jacques calls "influential" in formulating the bill--echoes the senator's sentiments.

"With the tax deduction, it allows young people who've just graduated to purchase cars...[to] have more purchasing potential, which in turn helps the state economy," Bench says.

Harvard College estimates that the cost for tuition, fees, room board and personal expenses will be $33,200 for the 1998-99 academic year.

To students eligible for aid, the College gives a combined job and loan offer around $6,000 to $7,000. Any remaining financial need is met through a combination of outside scholarships, federal grants and University scholarship funds. This year, those scholarships averaged $15,400 per aid recipient.

If passed by July 1998, the state bill would be a companion to the federal student loan tax cut that Congress passed as part of Clinton's education package last year.

Supporters and opponents of the bill can call the main State House switch-board at 617-722-2000 to voice their opinion.