Creating an income tax deduction for interest and principal paid, and an add back for certain federal deductions taken, on student loans and requiring lenders to provide additional principal and interest information to persons from whom student loan payments are received. (FE)

What it would have done

Summary by the Legislative Reference Bureau, the Legislature's nonpartisan drafting office. It's their wording, not ours.

This bill creates an income tax subtract modification, or deduction, for interest or principal or both paid by a claimant on a loan taken out by a student, the proceeds of which are used to pay for tuition, fees, books, room and board, and educational supplies that are directly related to a student beneficiary's attendance at a regionally accredited, nonprofit, postsecondary educational institution (student loan), but only to the extent that such a payment exceeds the required, scheduled amount that must be paid on the loan by the responsible party. Any person may claim the deduction under the bill. In addition, if the student loan interest deducted under the bill was also deducted by another individual on that other individual's federal income tax return, such a person must add to federal adjusted gross income the amount of the federal deduction claimed. The maximum annual deduction that a claimant may claim for each of his or her beneficiaries is the same amount as the maximum annual deduction that may be claimed for an amount contributed to a college savings program, or EdVest, account. The deduction created in the bill may not be claimed for amounts that the claimant uses to calculate the itemized deductions credit or for amounts that relate to tuition payments for which the claimant has already claimed a deduction under another provision of current law. Currently, this amount is $3,100 per beneficiary per year, as modified by the contributor's filing status and as indexed for inflation.

The bill also requires lenders to provide a notice to each person from whom the lender received payments of additional principal or additional interest during a calendar year if 1) the lender received timely periodic payments on the student loan during the calendar year; and 2) the lender also received payments of additional principal or additional interest during the calendar year. The notice must be provided by February 15 following the end of the calendar year and must identify the total amount of additional principal and additional interest paid by the person on the student loan during the calendar year.

Who's behind it

6 representatives are its authors⁠. All 6 are Republicans.

What it would cost

State agencies filed a cost estimate. Each opens as a PDF from the Legislature.

• Fiscal Estimate From DOR