U.S. Reps. Rodney Davis, Peters & Private Employers Announce Bill to Address Rising Student Debt
U.S. Reps. Rodney Davis (R-Ill.) and Scott Peters (D-Calif.) today at a press conference announced their bill, H.R. 795, the Employer Participation in Student Loan Assistance Act, to help address rising student debt. The legislation engages private employers and encourages them to offer a tax-free benefit to put toward an employee’s student loan debt, similar to the existing tax benefit for tuition assistance. If you missed the press conference, you can watch it on Davis' Facebook page here.
“Seven in ten college seniors last year graduated with student loan debt – which now represents the second highest form of consumer debt,” said Davis. “This debt is a drag on our economy because it prevents many young adults from contributing to our economy. Many are putting off buying a house, purchasing a car, or saving for retirement. The Employer Participation in Student Loan Assistance Act encourages employers to be part of the solution by allowing them to offer a tax-free employee benefit that will help graduates pay down their student debt. Some companies are already offering this benefit because they see the advantage it gives them when recruiting and retaining younger employees but we want to encourage more to participate so we can help both struggling graduates and our economy.”
“Access to affordable higher education has made the American dream attainable for millions of Americans, and is central to our nation’s competitiveness and success,” said Peters. “I would not have been able to attend college without student loans and work study programs, but the rising burden of student loan debt has weighed down graduates and is a drag on our entire economy. Just as allowing employers to offer tax-free tuition assistance has enabled more Americans to advance their education, offering this same incentive for student loan payments will speed up the repayment process so that graduates can begin to make investments such as buying a home, starting a family, or saving for retirement.”
Details of H.R. 795
Benefits to employees include:
• Will receive a tax-exempt benefit of up to $5,250 per year to pay on their already incurred student loan debt.
Benefits to employers include:
• Permits employers to assist employees who already have student loans to the same degree they can help employees with continued education.
• Helps companies recruit and retain young, educated talent.
• Employers can deduct the subsidy provided to employees.
Several private employers who already provide this benefit and are helping other companies offer this benefit were also in attendance to share how this legislation can grow the economy, reduce the rise in student debt, and help them recruit and retain talented young graduates.
Tuition IO is the nation’s first and most comprehensive employer-funded student loan contribution platform. They enable global companies to offer a benefit that their employees really need, while helping them attract, engage, and retain top talent. Tuition IO is led by CEO Scott Thompson. Among other executive positions, Thompson is the former CEO of Yahoo and former President of PayPal.
“The impact of The Employer Participation in Student Loan Assistance Act is immediate and highly tangible: employees get the full benefit, pre-tax, exactly the way they should," said Thompson, CEO of Tuition IO. "Adding tax relief to the equation could elevate student loan assistance alongside 401(k) contribution as one of the most valuable financial benefits a company can offer its workers that directly impact their quality of life today. We’re proud to stand alongside Representatives Rodney Davis and Scott Peters and shine a spotlight on this important piece of legislation that will benefit millions of Americans saddled by student loans.”
Peanut Butter is a Chicago-based startup with employees in multiple Illinois locations, that provides a benefits platform for companies to contribute to employees' student loan debt. The company has received several awards for its innovation and startup success.
"The $30k+ burden of student debt rests heavy on many college-educated Americans, just as the $1.2T+ federal student loan portfolio rests heavy on our nation,” said David Aronson, CEO of Peanut Butter. “Leading employers around the country are now partnered with Peanut Butter to provide student loan assistance programs that help employees tackle student debt. The Employer Participation in Student Loan Assistance Act will provide an important structure to align the interests of employers, citizens, and federal government in resolving America's student debt crisis."
GradFin is a Washington, D.C. based company that creates solutions to help reduce the staggering level of student debt in America. GradFin provides employers with a comprehensive platform to help their employees including the employer student loan contribution platform, employee financial education counseling, and refinancing solutions to help employees find lower interest rates on their student loans.
"GradFin applauds the bipartisan efforts by Congressman Rodney Davis (R-IL) and Scott Peters (D-CA) for offering a legislative solution to help borrowers pay down their student loans faster. Congress has an opportunity to act to bring more tax efficiency to the student loan payoff process and we encourage Congress to pursue this priority during negotiations to reform the tax code." Chris Walters, CEO of GradFin
Gradifi is the leading student loan repayment solution for employers looking to offer meaningful benefits for an engaged and empowered workforce.
“Gradifi applauds Representatives Rodney Davis, Scott Peters, Elise Stefanik, Jared Polis, and the many other members of Congress who introduced the bipartisan Employer Participation in Student Loan Repayment Act. As more than 43 million Americans are currently struggling to pay down their student loan debt and with college debt ballooning to over $1.3 trillion, the time is now to take action to solve this problem. This is why we are thrilled that a bipartisan group of Members of Congress have introduced legislation aimed at encouraging private sector participation in paying down debt. This bill sends an important message to employers that Congress supports their actions to help employees pay down their student loan debt and will ensure that employees can receive the full benefit offered by employers. We encourage Congress to act quickly and pass this much needed piece of legislation.“ – Tim DeMello, CEO of Gradifi.
Natixis Global Asset Management is one of the largest asset managers in the world, uniting over 20 specialized investment managers and managing more than $850 billion in global assets.
“This much-needed bipartisan piece of legislation will ensure that employees, like ours at Natixis Global Asset Management, will be able to receive student loan repayment assistance from their employer as a pre-tax benefit at a time when more than 43 million Americans are struggling to pay off their $1.3 trillion in existing student loan debt. Offering student loan repayment assistance makes sound financial sense, as it enables employees to pay down their loans faster and invest more in their future sooner, so they may achieve the same personal and financial milestones that were enjoyed by previous generations.” – David Guinta, President and CEO of Natixis Global Asset Management for the U.S. and Canada
SoFi is a new kind of finance company taking a radical approach to lending and wealth management.
"Younger Americans are entering the workforce with the highest student debt burdens in history, constraining their financial futures," said Rob Lavet, General Counsel for SoFi. "HR 795, the Employer Participation in Student Loan Assistance Act, helps alleviate that burden, and offers employers an excellent tool for attracting and retaining great employees, while lowering delinquencies and defaults in the federal student loan program. SoFi joins the bipartisan support for this bill and looks forward to working with Congress to help the tens of millions of Americans with student debt."
Society for Human Resource Management is the world’s largest HR membership organization devoted to human resource management.
“Expanding Section 127 is a win-win for employers and employees,” said Kathleen Coulombe, Senior Advisor at SHRM. It allows employers to attract and retain top talent, while providing employees with valuable assistance to offset the cost of their education.”
American Student Assistance, a Boston-based nonprofit dedicated to eliminating finance as a barrier to education.
Julie Lammers, Managing Director of Consumer Advocacy at American Student Assistance, “This is a great first step to encourage employers to help the millions of Americans who owe student loans manage that debt a little easier. Employers are one of the primary beneficiaries of a highly educated workforce, and we should find ways to encourage employers to become a solution to the problems associated with taking on student debt in order to get ahead in today’s job market. We applaud the efforts of Congressman Davis and Congressman Peters to push this needed solution forward.”