Ask your state officials to enact SB3273 / HB4736!
- PURPOSE: Offers a private sector solution for nonprofit workforce needs + student debt by creating a state income tax subtraction for charitable loan repayment received by eligible workers. Implements the partnership that was described and called for in HR26 (2021).
- SUPPORTED BY: Forefront, Alliance of Illinois Community Foundations, Illinois Economic Development Association, Illinois Hispanic Chamber of Commerce, Chicagoland Chamber of Commerce, Illinois Chamber of Commerce
- IMPACT: This proposal will help tackle both nonprofit workforce needs and student debt, while also benefiting the Illinois economy, in that when loans are forgiven, the workers’ income that would otherwise be spent on debt service begins circulating in the local economy instead. No General Revenue Fund impact.
- EQUITY NOTE: Eligibility geographies are an Enterprise Zone, Opportunity Zone, Underserved Area, Distressed Area OR “any area that has a bachelor’s degree attainment rate for the population that is below the state or national average." Eligible jobs are at a Qualified new business venture, Targeted Growth Industry, a Business Enterprise for Minorities, Women, and Persons with Disabilities, OR Not-for-profit corporation as defined by 805 ILCS 105/101.75(m). Black students are more likely to borrow to pay for college (90%) compared to White students (68%); more than a decade after graduation, 66% percent of Black borrowers hold more student loan debt than the amount they originally borrowed; 50%+ Black households holding student loan debt have a zero or negative net worth, compared to 32% of non-Black households (Brookings).
Additional Background:
Charitable loan repayment is generally not occurring in Illinois due to the significant tax bills repayment creates for the recipient of loan repayment. Meanwhile, the nonprofit workforce is heavily populated by workers with student debt and nonprofit employers continue to experience recruitment and retention challenges. In Illinois: 13.2% of the population has federal student loans; student loans are 8.5% of personal income; the average borrower has $38,473 in debt; 18% of borrowers are enrolled in income-driven repayment plans (Pew).
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