Republican state senator proposes student debt tax credit

DOVER — Senate Minority Whip Greg Lavelle, a Sharpley Republican who is up for reelection next month, announced Monday he plans to introduce legislation to reduce Delawareans’ student debt.

Some of the details of the proposal still need to be fleshed out, but the idea is to give qualifying individuals a $2,500 tax credit.

“Student debt is crushing the next generation of Delaware leaders,” Sen. Lavelle said in a statement. “The rising generation is less likely to form a family, buy a home and otherwise make progress due to the size of their debt burden. I think it’s time we did something about that.”

Modeled after a bill passed in Maryland earlier this year, the proposal in its current form would create a credit for Delaware residents with at least $20,000 in student debt. Individuals would have to live in Delaware for at least two years to be eligible, and funds freed up by the credit would have to be used to pay down loans within two years.

A person could receive it once every 10 years.

Greg Lavelle

It has not been determined what the penalty might be in the event the credit is not used to help pay student debt. Maryland’s law has a provision mandating the state must be reimbursed for the credit if it does not go toward eliminating debt.

According to the Senate Republican caucus, Sen. Lavelle hopes his proposal will start a discussion around student debt and ways to help Delawareans.

“This is simply the right thing to do,” the senator said. “It makes Delaware competitive in attracting knowledge workers. It helps keep successive generations of Delawareans tied to their community, so those roots go deeper. And it helps our economy through housing starts, auto purchases and other things that Delawareans with student debt are struggling to afford.”

According to a report from the Institute for College Access & Success, the average individual graduating from a Delaware university in 2016 had just over $33,800 in student debt. Only three states were worse.

Delaware also ranked poorly in the percentage of students graduating with debt, with 63 percent leaving with loans to pay off. That was 10th among states.

Nationwide, about 44 million Americans have a combined $1.4 trillion in college debt, the American Association of University Women says.

Laura Sturgeon, a Democrat trying to unseat Sen. Lavelle in the 4th Senatorial District, said in an email the idea is a start, but more is needed.

“We don’t get to wash our hands of the student debt crisis with a once-a-decade pittance that puts taxpayers on the hook for years of unchecked predatory industry practices,” she wrote. “Voters in my district deserve more than election-year epiphanies.”

Asked for comment, a spokesman for Gov. John Carney said the following in an email: “Since taking office, Governor Carney has focused on strengthening the economy and getting the state budget in order. In fact, the Governor last year tried unsuccessfully to get Senator Lavelle to support a balanced revenue package that would have made it easier to pay for programs like this student loan tax credit. The Governor understands the tremendous burden of student loans, and believes there needs to be more action at the federal level to address the rising cost of higher education.”

The General Assembly does not reconvene until Jan. 8, meeting any action on the yet-to-be introduced measure won’t come for months.

 

Reach staff writer Matt Bittle at mbittle@newszap.com

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