The state Senate voted Wednesday to repeal Michigan’s Tuition Tax Credit, bringing MSU students a step closer to rebates, refunds and reductions of tuition.
The Senate voted 21-14 in favor of eliminating the tax credit, which served as an incentive for institutions to keep tuition increases below the rate of inflation. One public four-year university and 17 community colleges received the credit last year.
The state House will have to pass the repeal before it is sent on to Gov. John Engler.
State community colleges and universities will be required to refund about $33 million to students if the credit is repealed.
“That money, had it not been used, would have lapsed into the general fund and used elsewhere,” said state Sen. John Schwarz, who sponsored the bill.
Schwarz, R-Battle Creek, said there was “no logical argument” against the bill, citing the lack of viable credit recipients.
“Some of the votes against it were on the principle that you shouldn’t repeal a tax credit,” he said. “But since this is one that no one can use, I think it is a pretty thin argument.”
Repeal supporters say it will come in handy for schools around the state that experienced tuition increases from 6.5 percent to 19 percent.
MSU’s 8.9 percent increase will be reduced to 6 percent if legislators agreed to repeal the tax credit.
“We’re going to work very hard,” MSU President M. Peter McPherson said. “We need to recognize that this has been a hard year for legislators. They’ve worked hard to be of what help they could. This is a way the legislators can directly help students.”
If repealed, an MSU student taking 15 credits would receive a $75 refund for the fall semester and a $75 tuition reduction for the spring.
McPherson said it may be more difficult for the repeal to pass through the House, so he will be recommending that students contact their representatives to encourage a repeal.
“First and foremost in my mind was the students and families at Michigan State University and how difficult it is to pay those tuition bills, especially with the tuition increases this past fall,” said state Sen. Dianne Byrum, D-Onondaga, whose district includes MSU. “The governor had supported repealing this in order to open up the door for higher education and to receive more spending.”
But MSU Trustee Robert Weiss said the Senate made a grave mistake by repealing the tax credit.
Legislators should have adjusted the tax credit’s characteristics to allow more schools to qualify, instead, he said.
“It’s a step backward,” Weiss said. “It’s a tax shift on the back of middle class families, and it also will take off the restraints on increasing tuition.
“I’m afraid you’re going to see that this is a one time refund and then next year it will be business as usual, high tuition and low appropriation from the state.
“Who is going to suffer but the student and their family, and the big spenders will be able to continue doing it.”
