SB 477 provides needed relief for graduates
SACRAMENTO – Californians burdened with high student loan debt would get some much-needed relief on their taxes under a bill introduced today by State Senator Bob Wieckowski (D-Fremont). SB 477 would allow people to take a greater tax deduction for the interest paid for student loans.
“Graduates and former students who dropped out prior to gaining their degrees but who are still paying off their student loan debt are under enormous pressure to make ends meet, while juggling housing, medical and other expenses,” said Wieckowski, a bankruptcy attorney and member of the Senate Judiciary Committee. “The average graduate owes about $23,000 in California. Student loan debt on this generation leaving college is a financial burden that is unprecedented in our history and it represents a major drag on our economy. SB 477 will enable these consumers to deduct all of the interest payments on their taxes and it will also serve as a strong incentive for them to stay in California at a time when our state is facing a shortfall of 1.1 million college graduates by 2030.”
Currently, Californians can only deduct $2,500 of their student debt interest payments. A 2017 study by The Institute of College Access & Success (TICAS) found the average graduate in California will leave college with $22,785 in student loan debt, and the amount is considerably higher at several private universities in the state. The TICAS study noted the burden is disproportionately born by students from low-income families, students of color and first-generation college students.
A report by the Campaign for College Opportunity found that 69 percent of college students at California Community Colleges, the University of California and the California State University system in 2016-2017 were identified as non-white.
For graduate students, the student loan debt is significantly higher. A New American Foundation study found the median debt was $57,600 nationwide.
SB 477 would provide important savings for college-educated workers who are vital to California’s economy. College graduates earn higher wages than non-graduates, boost state tax revenues and our better prepared for the state’s high skill jobs. But reports show only 33 percent of working-age adults will have a bachelor’s degree by 2030. By enabling these workers to deduct their student loan interest payments on their taxes, California can better retain these employees and strengthen the state’s workforce.
Senator Wieckowski represents the 10th District, which includes southern Alameda County and parts of Santa Clara counties.