In Ohio, recently introduced legislation could greatly assist residents in paying for college by way of a tax credit.
If a new proposed bill gets signed into law, the cost of obtaining a college degree could get more affordable for Ohio students. New legislation was introduced May 17 that could cover 90 percent of the costs of attending college. This means students would ultimately be responsible for covering just 10 percent of their tuition, the News-Herald reported.
Ohio students tend to incur some of the highest levels of debt in the country. The state ranks 45th nationally in terms of overall college affordability. To that end, state Rep. Dan Ramos has spent several years working on a solution with the Ohio Lets Everyone Achieve Right Now (LEARN) tax credit.
“Our economy increasingly demands a college degree, but for many Ohioans, college remains unaffordable,” Ramos said, claiming that the legislation would allow students to focus on their career paths after graduation, rather than worrying about how to repay their student loans.
How Does the Tax Credit Work?
The legislation would create a refundable tax credit that would cover 90 percent of a student’s expected contribution, spreading it out over 10 years. The credit will be based on the cost of attendance and the total family contribution, subtracting any aid or college scholarships students receive.
To apply, Ohio students would be required to fill out the Free Application for Federal Student Aid (FAFSA). From this information, officials will determine the expected family contribution. This is the maximum amount a family could pay for their student to attend college.
The expected family contribution is calculated based on income, family size, and other factors. It will also be used to determine the student’s eligibility for federal loans.
The tax credit would become available at the end of each year and would be credited to the person paying for the tuition. So if a student is paying for their own education, they would receive the tax credit. If their parents are paying for their child to attend school, they’ll receive the money.
The money will be received on Ohio tax returns as an incentive to students to remain in the state. If they choose to move elsewhere after graduation, they’ll no longer be eligible to receive the tax credit, Cleveland Scene reported.
The plan would cost Ohio $189 million in its first year, but Ramos argues that the costs will be offset by the money graduates will put back into the economy. For instance, the tax credit could be used for a major purchase like a home, which would be a boost to the Ohio housing market.
Currently, the Ohio LEARN tax credit is awaiting a bill number and committee assignment in the House.