A new bill titled the Employer Participation in Student Loan Assistance Act (H.R. 795) was recently introduced to address the issue of student loan debt. This bill would encourage private employers to offer employees a tax-free benefit to put toward their student loan debt, according to a recent article by BenefitsPRO.
While several bills have been presented in the past, this bill was introduced as a bi-partisan measure. Key findings of the survey research behind the bill included:
Only about half of workers with student loan debt are contributing to a retirement savings—such as an IRA or 401(k).
Younger workers who are starting to repay their student loans would much rather receive student loan repayment benefits.
The majority of respondents say they would use the funds to make extra student loan payments versus putting it toward their regular monthly loan payments. Doing so could save employees a considerable amount of money in interest charges.
More workers want a student loan payment benefit more so than additional vacation or PTO.
In a related study conducted by American Student Assistance, student loan repayment was the third most important employee benefit, behind health insurance and a 401(k) match. Significantly, 86% of employees said they’d stay with a company for at least five years if their employer helped pay down their student loans.
Per the BenefitsPRO article, provisions included in the introduced bill include “a tax-exempt benefit of up to $5,250 per year for employees to pay on their already incurred student loan debt, as well as… the ability of employers to assist employees who already have student loans to the same degree they can help employees with continued education; the attraction of the benefit in employee recruitment and retention; and deductibility by the employer of the subsidy provided to employees.”
The idea of student loan debt relief as an employee benefit continues to be a hot topic among HR and benefit professionals—as well as among millennials in the workforce. Solutions are arising from multiple verticals including: finance, technology, and employee-benefits companies. All are bringing their own version of an innovative solution to the employee benefits marketplace, even though the channel is new to the finance and tech providers. Passing a bill that will allow for the benefit to be tax-exempt could help the concept grow from a unique to a mainstream offering.
One provider that originates from an employee-benefits background, http://StuLoWellness.com, is providing a student debt relief benefit with a holistic approach to financial wellness by offering a program to consider all employees’ needs.
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Sources: Employees clamoring for student debt benefit
Student loan bill capitalizes on employee demand for repayment help