Bill: Employers could permanently contribute to student loan debt repayment

The Employer Participation in Repayment Act is bipartisan legislation to help Americans tackle their student loan debt.

The bill, introduced today by U.S. Sens. Mark R. Warner of Virginia and John Thune of South Dakota, alongside U.S. Reps. Nicole Malliotakis of New York and Scott Peters of California, would permanently make a provision that allows employers to contribute up to $5,250 tax-free to their employees’ student loans.

Warner and Thune along with Peters negotiated the inclusion of a provision in the CARES Act in 2020 that allowed employer contributions temporarily. Later in 2020, as part of the government spending package, they secured an extension allowing the benefit until January 1, 2026. By making the tax benefit permanent, today’s legislation would provide employees with much-needed relief and employers with a unique and permanent tool to attract and retain talented employees.

“As the first in my family to graduate from college, I wouldn’t have been able to afford my tuition without the help of student loans. Unfortunately, as the cost of higher education continues to skyrocket, so has the rate of Americans who turn to student loans to pay for college. 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 tool to recruit and retain a talented workforce while also helping working Americans manage their financial future,” Warner said.

Thune said the bill would incentivize employers to assist employees in repaying student loan debt.

“This bill would permanently equip employers with this unique tool to help attract and retain talented employees while protecting American taxpayers from costly burdens. This is a win-win for graduates and their employers, and I hope it will once again garner strong, bipartisan support,” Thune said.

Americans owe a combined $1.77 trillion dollars in student loan debt, according to the most recent quarterly report from the Federal Reserve. The debt is a significant financial burden that not only influences the way the American workforce saves and spends, but also has a stifling effect on the economy. The legislation would update an existing federal program so that it works better for employees living with the reality of burdensome student loan debt.

“Over the past 20 years, the cost to attend college has risen 45 percent, forcing students to choose between pursuing higher education and taking on tens of thousands of dollars in burdensome student loan debt. Our bipartisan legislation enables employers to contribute up to $5,250 per year, tax-free, toward their employees’ student loans—helping those entering the workforce pay down debt faster and build a stronger financial future. This tax incentive will continue to strengthen our workforce, increase our nation’s competitiveness, and provide much-needed economic relief to millions of Americans,” Malliotakis said.

Peters said he relied on student loans to earn a college degree and higher education cost much less then.

“Now, the collective debt among Americans is $1.7 trillion, which limits our economic growth and the economic prospects of young adults. Over the last five years, this program has been a huge success — employers have helped pay off thousands of employees’ loans and it gave employers a tool to compete for the best talent. This public-private collaboration has proven itself as a cost-effective solution to the student debt crisis and it is imperative that we make it permanent,” Peters said.

According to Gail daMota, president of the Education Finance Council, the legislation would reduce student loan burdens on borrowers and encourage successful repayment.

“In turn, it gives employers a permanent tool with which to attract a stable workforce. EFC is proud to endorse this legislation, and we look forward to collaborating with you to advance public policies that appropriately balance the interests of student loan borrowers, employers, and taxpayers,” daMota said.

Fidelity Investments Head of Student Debt and Senior Vice President Jesse Moore said permanent extension of the incentive for employers is critical for America‘s workforce.

“As a market leader for student debt workplace benefits since 2016, Fidelity has enabled hundreds of employers across a wide range of industries to seamlessly contribute to and ease the student debt burden for their employees. To date, these employers have helped more than 100k employees save more than $500mn and an average of 3-4 years in payments. The growth and popularity of these benefits have accelerated since the introduction of this provision as part of the 2020 CARES Act, and we look forward to working with Congress to enact this legislation permanently into law,” Moore said.

National Association of Realtors® President Kevin Sears said the organization has long supported legislative efforts to ease student loan debt.

“This legislation creates a win-win for both employers in search of attracting and maintaining talented workers and employees who will receive relief on their debt, enabling them to save money for important life decisions like purchasing a home,” Sears said.

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Warner bill would allow employers to help repay student loan debt