Legislators push student loan forgiveness for one industry
As Republicans in Washington fight Democratic efforts to forgive federal student loans, GOP legislators in New Hampshire are promoting $1 million in tax-funded student loan forgiveness for graduates in one high-tech industry — human organ manufacturing.
In 2018, legislators passed a package of subsidies and tax breaks sought by the Advanced Regenerative Manufacturing Institute, a Manchester organization founded to develop synthetic human organs in partnership with other companies, including new local startups.
That package, Senate Bill 564, granted companies engaged in advanced regenerative manufacturing a 10-year exemption from state business taxes. At the time, ARMI was the only organization that qualified for the tax exemption. The Department of Revenue Administration’s most recent annual tax expenditure report states that multiple companies have filed paperwork to be deemed eligible for the credit, but there are so few that disclosing details of the filings would violate their privacy under state tax information disclosure laws.
Included in the law was a Regenerative Manufacturing Workforce Development Program, through which the state would finance the repayment or forgiveness of student loans for qualified graduates. To be eligible, the graduates would have to work for a qualifying manufacturer in New Hampshire for at least five years.
In the four years since its authorization, the Regenerative Manufacturing Workforce Development Program has never been funded. Lawmakers tasked the New Hampshire Business Finance Authority (NHBFA) with designing and administering the program, but made no appropriation.
Legislators learned of the program’s unfunded status earlier in the legislative session, and Republican leaders took steps to find money for it. A $1 million appropriation was attached to House Bill 1256, a bill dealing with the Department of Military Affairs and Veterans Services.
In the HB 1256 conference committee last Wednesday, the funding drew bipartisan support, with legislators noting that the $1 million was a fraction of what had been intended for the program.
“This is a test run to see how much they actually need for this,’ Rep. Al Baldasaro, R-Londonderry, said.
Need is an interesting choice of words. ARMI initially received an $80 million Department of Defense grant for its regenerative manufacturing work and $214 million in other investment, according to a DOD press release from 2016. It has attracted other companies to Manchester’s Millyard, where work on human tissue generation is expanding — without the student loan subsidy.
It is not known how much of an employee’s student loans the program would repay or forgive, as the program has been on hold pending funding. A draft proposal the NHBFA gave to legislators in 2019, assuming full funding, stated that employees would have their student loans entirely paid off over five years.
In general, loan repayments are considered taxable income unless otherwise exempted from taxation by law (as is the case with many federal student loan repayment and forgiveness programs). The NHBFA’s draft proposal stated that under federal income tax laws as of 2019, the forgiveness “would result in taxable income” to the employee.
The local forgiveness for regenerative manufacturing employees is supposed to help keep the industry in New Hampshire and facilitate hiring. But such favoritism hurts other employers who compete for the same workforce, and it transfers wealth from some businesses to others, based purely on which ones are politically favored.
And such subsidies clearly aren’t needed in an industry that has proven capable of raising hundreds of millions of dollars in startup capital.
In Washington, Republicans are moving in the opposite direction. U.S. Senate Republicans in April introduced the “Stop Reckless Student Loans Action Act” to end the Biden administration’s pause on student loan repayments and block future loan forgiveness.
One stated reason for opposing federal student loan forgiveness is that most Americans don’t have college degrees, and they would wind up subsidizing the degrees of the roughly one third of Americans who graduated from college.
In New Hampshire, 35.4% of men and 38.4% of women have a bachelor’s degree, according to a state report issued in 2019.
For years, Republicans in Concord have been divided on the issue of student loan forgiveness.
Earlier in the session, legislators blocked a Sununu administration effort to create a larger-scale loan forgiveness program. The Joint Fiscal Committee tabled a proposal to use $17 million in federal American Rescue Plan funds to forgive the loans of students who agreed to work for at least four years in New Hampshire after graduating college.
Gov. Sununu in 2019 proposed a $32 million student loan assistance program to be financed with revenue from the state’s 529 college savings program. Legislators rejected the idea in favor a smaller Graduate Retention Incentive Program.
That program offers free job postings and marketing for companies that agree to give a $1,000 bonus or student debt payment to employees who agree to workin the state for four years.
New Hampshire has an established loan repayment program for medical professionals who agree to work in underserved areas of the state. It cost $766,783 in the current budget.
