The Oct. 8, 2019 Finance Committee meeting of Philadelphia City Council was punctuated by lively debate regarding Councilman David Oh’s student debt tax credit bill. Because the bill was not advanced by committee, it will not be heard at the general meeting.
The bill would have allowed residents who graduated from a college or university within the last five years to apply for up to $1,500 in tax refunds if they owe more than $35,000 in student loan debt.
“Pennsylvania is at the epicenter of the student debt crisis,” Oh said in his remarks during the hearing. “Pennsylvanians carry the third most student loan debt per person in the nation.”
Oh said that more than 2 million residents of Pennsylvania carry a student loan debt over $35,000. After mortgage debt, student loan debt is the second largest area of borrowing.
The intention of the bill, Oh said, is to attract and retain middle-class young professionals who want to start and grow their careers in Philadelphia.
According to Oh, graduates from Chestnut Hill College, Temple University, and the University of the Sciences carry significant loan debt after graduation. Students from these institutions average $32,378, $38,519, and $46,210 of debt upon graduation, respectively.
“This bill may help these workers start families, buy homes, and continue to live in Philadelphia. We can imagine the economic impact of this retention,” Oh said.
To earn the full tax credit, applicants would have to earn at least $38,650 a year. That wage is below the city’s median income of $40,649 per year.
Mayoral Administration Objections
Frank Breslin, revenue commissioner and chief collections officer for the City of Philadelphia, said Mayor Jim Kenney’s administration does not support the passing of the bill due to what he claimed was a “scattershot approach,” when a more targeted strategy is needed.
“Although the administration recognizes the tremendous growth in Philadelphia’s college educated population, and the rising costs of postsecondary education, we don’t believe this bill creates a cost effective or equitable solution to the college debt burden of city residents,” Breslin said.
Administration concerns stem from the high student debt level required for eligibility, meaning that higher-earning graduates at expensive institutions would benefit while graduates of more affordable options like the Community College of Philadelphia would be excluded. The other significant administration objection is the overall cost of the plan.
“Our conservative estimates of the expansion of this credit to the entire population of college graduates with at least $35,000 of debt could include as many as 81,000 to 92,000 graduates, potentially costing between $88-139 million annually for the first five years,” Breslin said.
According to Breslin, such a large refund program could drain funds that currently go to essential city services and other assistance programs.
“We believe that other ideas should be explored, and the administration has said that it is willing to work with city council to design a program that meets the needs of Philadelphians who are struggling to pay for higher education,” Breslin said.
In response, Oh said that if the administration or someone else had a targeted strategy, he would be happy to receive it.
“If you are saying that we should lower the threshold from $35,000 to $10,000 or $5,000, I would agree with that, and I would be happy to do it,” Oh said. “But that would increase the amount the money that is made available in the tax credit, so I don’t know if that’s what the administration is saying.”
Councilmember Blondell Reynolds-Brown said council has a responsibility to be fiscally responsible, and the bill seems exceedingly expensive.
“With most federal and local programs, there is a means test,” Reynolds-Brown said. “I didn’t hear (anything like that) from (Breslin’s testimony) or from the sponsor of the bill, so I’d welcome information.”
Councilmember Cindy Bass is unsure of what the administration’s suggested course of action was for the bill. While she recognized it was not a perfect bill, she was willing to vote it out of committee.
“There are some things that I’d like to see, particularly addressing who would be eligible, and making sure those with lower debt would also qualify,” Bass said. “We can’t just keep kicking this can down the road and hope for a solution next year, or the year after that. Why not do it now?”
Bass said the administration’s policy on taxation needs to be rethought on a multitude of levels, comparing arguments against the student debt bill to those against the 10-year tax abatement
“We have a very large population of people who live in the city of Philadelphia who can afford to pay their fair share of real estate taxes and school taxes who are really off the hook,” Bass said. “All of these things conflict with one another, so it’s very confusing to pinpoint what the administration’s overall policy is when it comes to taxation.”
Next Steps
Oh said the bill was being held due to differences of opinion about what the bill could and should do.
“Unfortunately, the more you try to do with it, the more opposition it has,” Oh said. “It goes from being a bill of competitiveness to a bill trying to deal with poverty and continuing education. Many other things that increases the cost, which is why there is opposition to it in the first place.”
Oh recognizes the proposed expense of the bill is the root of the opposition.
“I think what I heard is that people oppose it, but they don’t want to say they oppose it,” Oh said. “In other words, they’re saying it doesn’t do enough good things, (but those good things) will also make it more expensive, (which is also) why they oppose it.”
Oh hopes a hearing can be scheduled before the end of the year to consider the bill.
Lawrence McGlynn is a recent graduate of Temple University’s Klein College of Media and Communication where he earned a Master’s in Journalism. For the next several months he will be reporting out of City Hall on various council and committee meetings, the city’s budget, and how these impact the daily lives of Philadelphians.
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