We’ve been saying it for awhile, but student loan repayment is really starting to heat up in the employee benefits space. U.S. student loan debt has eclipsed $1.6 trillion and is the second highest debt category for Americans behind home mortgages. And now, legislators are taking action to encourage employer aid to borrowers.
Legislation was reintroduced in the Senate last week that would allow employers to contribute up to $5,250 tax-free annually to employees’ student loan debt repayment. This bill, which is gaining support on both sides of the aisle, expands upon current legislation that gives a tax break to employers providing tuition reimbursements.
The bill was introduced by Senator Mark Warner, D.-Va., along with 18 co-sponsors. Companion legislation was also reintroduced to the House with 100 co-sponsors.
Similar legislation has been introduced to Congress before, but never with this level of support from both sides. The student debt crisis is affecting constituents all over the country from all demographics. The mountain of student loan debt has become impossible to ignore and legislators are being forced to act.
The bill also marries both left and right ideals. Republicans have long supported tax cuts, which this bill offers to employers. Democrats have more vocally championed finding ways to make college more affordable, which this bill can help with if its encourages more employers to offer student loan repayment.
Only about 4% of employers currently offer student loan repayment as a benefit, but experts predict this number to increase if the bill passes. Student loan repayment has been shown to improve recruiting and retention, which is especially important as low unemployment rates have shrunk applicant pools.
Student loan repayment is also not a terribly expensive benefit to administer. Most companies offering the benefit contribute between $50 and $200 per month per employee with lifetime caps in the $10k range. Companies can also reallocate money from less desirable benefits to fund a repayment program.
Bipartisan support combined with public frustration over student loan benefits suggest this bill should pass. Still, contact your local representative if they are not already supporting the bill and encourage them to push it along sooner rather than later. And talk to your employer about adding the perk to your own benefits package!