With student loan debt topping more than $1.4 trillion in the United States, advocates are urging employers to fight for a tax-exempt student loan assistance benefit as tax reform efforts ramp up in Washington.
U.S. Rep. Rodney Davis (R-Ill.) joined Tuition.io CEO Scott Thompson on Wednesday to discuss his bill, the Employer Participation in Student Loan Assistance Act, at EBA's Workplace Benefits Summit in Boca Raton, Fla.
The bill, H.R. 795, would expand Section 127 of the IRS Code, to count student loan repayment benefits as tax-exempt educational expenses. It would let employers make up to a $5,250-per-employee tax-free contribution toward their workers’ student loans.
“This is a bill to help [college graduates] when they get out,” Davis said. “It’s not a chance for colleges to charge more” because employers will pay for those costs once students are hired.
Companies such as Aetna and PwC offer student loan benefits for up to $10,000 and $7,200, respectively; however, employees pay taxes on those benefits.
If the bill becomes law, companies might require employees to make their primary payment to receive the benefit, Thompson said. Employees are more likely to make those payments if they’re also receiving an additional monthly contribution from their employers to pay down the principal balance.
“I don’t think Washington takes it seriously enough,” Davis said. “I don’t think the companies that would benefit the most take it seriously enough.”
Davis sponsored and introduced the bill with U.S. Rep. Scott Peters (D-Calif.) in February; in March, Sen. Mark Warner (D-Va.) introduced a similar bill, S. 796, which has been referred to the Committee on Finance. Both bills have bipartisan support.
Davis encouraged the employers in the audience “to take a risk” and reach out to their Congressional members to show support for student loan assistance legislation.
“This is the best time that groups like this, those involved in employee benefits... to push this issue forward,” Davis said.
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