A bill has been introduce in Congress that would allow employers to contribute to the student loan repayment efforts of their employees, similar to how contributions to 401(k) programs work.
Sen. Cory Gardner [R-Colo.] last week introduced the Student Loan Repayment Acceleration Act, which would allow employers to contribute up to $10,000 every year to help repay the student loans of their employees. The contributions would be tax-free, just as 401(k) contributions are.
“Student loan debt makes it harder and harder for graduates to get ahead,” said Sen. Gardner in a statement. “I’m hopeful my legislation can make it a easier to pay off loans by allowing employers to contribute to their employees’ student loans like many do for 401k plans. Every little bit helps and this can be a model for further policies to deal with the growing problem of student loan debt.”
There are a growing number of companies that are helping their employees pay off their student loans, according to published reports. Sen. Gardner’s legislation would give the employers options, as well as amending the Internal Revenue Code to make the contributes exempt from payroll, income, and federal unemployment taxes.
Under the proposal, companies could either make payments to help repay the employees’ student loans or the companies could match a payment made by the employees.
Student loan debt has become a growing concern as the amount of unpaid loans continues to increase. There were about $1.5 trillion in unpaid student loans outstanding as of the second quarter of 2018, according to data from the Federal Reserve Board.