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DES MOINES, Iowa - Iowa residents could receive a tax credit for student loans if they earned a degree from a regent institution, community college or non-profit university in Iowa under legislation considered by a three-member House panel Tuesday.
Lawmakers didn't sign off on the bill that morning but said they want to see what the full fiscal impact might be for the credit.
"We may need to trim this back a bit in terms of who qualifies for the tax credit," said Rep Greg Forristall, R-Macedonia, on once the scope of who is eligible is determined.
Jim McNulty, project manager for the Department of Revenue, told the House Ways and Means subcommittee the department will file a fiscal note later this week on the potential scope of such legislation. An individual's credit would not exceed 20 percent of the average resident tuition for the three state universities. McNulty said rough estimates indicate with the average base tuition being $6,650 in the past year, individuals eligible for the tax credit could receive a $1,330 maximum tax credit.
Several lobbyists urged lawmakers to expand the scope of students eligible for the tax credit to graduates from for-profit institutions, online schools and trade schools in the state. Mike Heller, lobbyist for Kaplan University said he took issue with the definition of eligible institutions.
"We think it should be expanded to include students who graduate from for-profit institutions. The debt loan concerns are the same for the student," Heller said.
The average student debt on graduation from Iowa's three public universities was $28,293 for the class of 2013, according to the Iowa College Student Aid Commission. The survey showed for-profit graduates saw an average of $23,485 in student debt on graduation, non-profit graduates had $31,497 on average and community college graduates had $14,267.
Paula Dierenfeld, lobbyist for the University of Phoenix, said Iowa students who take online classes offered from institutions in other states should also be considered.
"It's kind of a new era of learning in Iowa with these online courses... and we believe that those students, because they're residents of Iowa, taxpayers in Iowa, receiving their degrees here in Iowa and working in Iowa should be as eligible for these tax credits as other students," she said.
McNulty told lawmakers there is a concern about potential "double dipping" with a tax deduction already available for some who can receive up to a $2,500 deduction for state and federal tax returns.