State Rep. Kevin Hensley and State Sen. Cathy Cloutier announced June 26 they have introduced bi-partisan legislation — House Bill 248 — that creates a Delaware personal income tax credit for interest paid on student loans.
The proposed credit would not exceed $500.
In Delaware, the average student loan debt is $34,144. Total student loan debt in the U.S. is reportedly $1.6 trillion; the second-highest category of personal debt, after mortgage loans. Student loan debt is larger than the debt on automobiles, credit cards or home equity loans. In the last decade, it has grown by a cumulative 157%.
“Over the last several weeks, hundreds of Delaware high school students have been graduating,” said Hensley. “Many of them will face an enormity of debt that comes with student loans as they take their next big step in life to attend higher education. Our high school graduates who have successfully landed as college freshmen will be facing staggering tuition costs, as well as the dilemma of how to pay off college loans once they’ve graduated from college.”
In addition to the graduates with personal loan obligations, many parents have also shouldered part of the college costs and face a similar problem. In 2014, the average parental debt for student loans was $16,600.
“We prioritize the deduction of interest paid on home mortgages to encourage home ownership in Delaware,” said Hensley. “We need to establish a similar public policy on assisting our young people as they enter the workforce as recent college graduates.”
“Providing for some tax relief by adding to our tax code the provision that allows for a credit on the interest paid on student loan debt is good public policy,” said Cloutier.