BOSTON – At the Association of Independent Colleges and Universities in Massachusetts’ annual dinner on December 5 in Boston, more than 400 attendees, including Governor Charlie Baker and 31 college and university presidents, celebrated the passage of legislation creating a college savings tax incentive for Massachusetts families. Sen. Eileen Donoghue, who sponsored the legislation, was a special guest and delivered the keynote remarks.
Under the new law, Massachusetts residents will be able to deduct contributions to 529 college savings plans from their state taxable income, up to $1,000 for single filers and up to $2,000 for married couples filing jointly. The deduction will be available starting in the tax year that begins on January 1.
“Encouraging families to save for college is smart policy. It both increases the chances that students attend college and reduces the amount of debt they incur to pay for it,” Donoghue said at the event. “And with student debt ballooning out of control in recent years—the average borrower who graduated in 2012 owed more than $29,000—incentivizing families to save for college is also an economic imperative.”
At the dinner, AICUM played a video explaining how the legislation became law during a year of tight budget constraints. AICUM identified a tax loophole that benefited out-of-state residents and found a way to close it with help from Sen. Michael Rodrigues, Senate chair of the Joint Committee on Revenue. That freed up money for the new tax deduction, allowing Donoghue and Rep. Joseph Wagner, chairs of the Joint Committee on Economic Development and Emerging Technologies, to include it in the state’s economic development bill.
“Senator Donoghue’s leadership and dedication were critical components in the creation of this tax deduction for Massachusetts families saving for college,” said AICUM President Richard Doherty. “AICUM was proud to work with her to provide another tool for families as they save for college expenses. Simply put, this legislation would not have passed without Senator Donoghue.”
During her speech on Monday night, Donoghue also previewed one of her priorities for the next legislative session: a bill encouraging employers to offer student loan repayment as an employee benefit. Several companies, including Fidelity, have started offering loan repayment programs, and data suggest that millennials view them as a valuable workplace benefit.
Seventy-six percent of respondents to American Student Assistance’s 2015 “Life Delayed” survey said that their choice to take a job would be considerably affected by the availability of a student loan repayment program. Despite that high level interest, only three percent of employers currently offer one. Donoghue said she would like to see that number increase in the coming years.
“Through repayment or matching programs, employers can help workers pay off their student debt more quickly. That’s significant, because it means millennials can buy a house, start a family, and begin saving for retirement at a younger age,” said Donoghue. “Incentivizing more employers to provide student loan repayment will be a boost to the Massachusetts economy and a relief to young families.”