Back in February of this year Senators John Thune (R-SD) and Mark Warner (D-VA) introduced a new bill to help fight the growing student loan debt that would encourage more employers to offer student loan repayment assistance to employees by making contributions made to their employees tax free. The Employer Participation in Repayment Act, which (if passed) would allow employers to contribute a maximum of $5,250 tax-free to their employees’ student loans (FULL TEXT/SUMMARY OF BILL).
The aim of this bill is to expand he Employer Education Assistance Program. Currently, employers are only tax incentivized to offer employees up to $5,250 per year in tuition assistance, which can help reduce the amount of student loans required, but nothing in regard to assisting employees who have already graduated.
Where is the bill at now?
The bill is still making its way though congress, waiting on another, larger tax bill that it will be a part of to be introduced to the House. Currently the Employer Participation in Repayment Act is backed by over two dozen Senators and 140 House members—from both sides of the political divide. The bill also has the favor of Ivanka Trump, who in a statement to CBS News, said that she believes the bill “will have a transformative effect on students entering the workforce as well as workers seeking to advance their careers. We hope that Congress can set its differences aside and provide solutions.”
Benefits Of Employer Assistance For Student Loan Repayment
“Young workers feel highly stressed as a result of the burden of student debt, and that debt clearly impacts their health and productivity in the workplace,” reports Kevin Fudge, director of consumer advocacy at American Student Assistance (ASA), a nonprofit organization that helps eliminate financial barriers to education, to SHRM. “Employers should realize that in order to retain the brightest young talent and demonstrate their commitment to employee well-being, they need to provide concrete and straightforward solutions to help alleviate the burden of student loan debt.”
According to a survey of 500 employees aged 22-33 conducted by the ASA, shows just how impacted by their student loan debt that the young workforce is.
- Almost 50% reported that they were constantly thinking about their student loan debt; taking focus away from their job duties.
- 65% reported the need for a second job in order to maintain their student loan repayment obligations.
Employees can petition their companies to request student loan repayment assistance programs to be added to their benefits packages and employers can seek the assistance of The Student Loan Advisory Group to implement the best type of benefits package that would suit their employees. And why not? There are several benefits of offering student loan debt assistance to employees—and with the majority of the workforce carrying student loan debt, having a benefits package catered to your employees is a no-brainer.
The ASA survey also reported that:
- Nearly all (86%) of those partaking in the survey would stay loyal to a company that provided student loan debt assistance for 5 or more years.
- Even more (92%) said that they would partake in a student loan benefit program, even one designed with only matching their own contributions like a 401(k).
- Even just access to a student loan debt counselor would be an enjoyable benefit—one that 79% reported they would take advantage of seeking counsel from.
You can read more about student loan debt assistance benefit programs in our other blog and the additional benefits they pose to employers. There are already many employers already beginning to offer employee benefits that include student loan debt repayment options—without the tax benefit yet passed by Congress. Hopefully, the program passes, and more employers are encouraged to take part in offering assistance as well.