Senators Introduce Legislation to Ease Student Debt Crisis
Inside Subprime: March 26, 2019
By Aubrey Sitler
Federal lawmakers introduced bipartisan bills in February 2019 that could significantly impact those living with student debt by expanding employers’ abilities to repay employees’ student loans tax-free.
Known as the Employer Participation in Repayment Act (Senate Bill 460 / House Bill 2043), this proposed legislation was led in the U.S. Senate by Sens. Mark Warner (D-VA) and John Thune (R-SD) and in the U.S. House by Representatives by Reps. Rodney Davis (R-IL) and Scott Peters (D-CA).
If passed, this Act would allow employers to contribute up to $5,250 directly to each employee’s student loan balance, thus offering the potential to decrease individuals’ student loan burdens and adding another recruitment and retention tool to companies’ incentive ranges. This is an expansion of the currently standing Employer Education Assistance Program, which allows employers to provide tax-free assistance to staff who pursue educational opportunities while employed by their companies but does not apply to student loan repayment.
Sen. Warner affirmed this as one of his intentions, stating: “Today too many Americans are saddled with tough-to-manage student loan debt, with no end in sight. That’s why I’ve teamed up with Sen. Thune to create an innovative, bipartisan approach to help ease the burden of student loans. By making employer student loan repayments tax-exempt, employers will have a new tool to recruit and retain a talented workforce while also helping working Americans manage their financial future.”
Student debt across the country continues to mount, reaching a record $1.5 trillion as of the end of 2018, according to the St. Louis Federal Reserve. On average, those with student loan debt owe between $20,000 and $25,000 and they pay between $200 and $300 per month in student loan repayments. This is in part due to the drastically increasing costs of earning higher education degrees. According to the College Board’s 2018 data, between 1988 and 2018, the average published tuition and fees at public two-year, public four-year, and private non-profit four-year institutions have increased by 115.3%, 204.5%, and 110.6%, respectively.
As the cost to attend college increases and Americans’ student loan debt continues to mount, and if this legislation comes to fruition, it could seriously impact companies’ approaches to recruitment, as well as student loan borrowers’ job-search strategies.
“It’s no secret that as today’s college graduates look toward the next chapter in life, they often trade their cap and gown for debt and uncertainty,” said Sen. Thune. “This bipartisan legislation, which I view as a win-win for graduates and employers, is good policy and one that I hope garners strong support.”
The bill had numerous co-sponsors and initial support in both chambers of Congress, but no updates have arisen yet within their respective committees.