U.S. Rep. Rodney Davis (R-IL) and 99 members in the U.S. House of Representatives last week reintroduced bipartisan legislation that would encourage employers to help their employees pay off any federal student loan debt.
“This innovative approach to student loan debt that has the potential to be the 401(k) of student loans and help millions of graduates who are struggling with student debt,” Rep. Davis said on Thursday.
The Employer Participation in Repayment Act, H.R. 1043, sponsored on Feb. 7 by U.S. Rep. Scott Peters (D-CA) with Rep. Davis the lead original cosponsor, would help companies recruit and retain employees by making employers’ student loan payments tax exempt up to $5,250 a year, according to the lawmakers.
“Student loan debt is now the second highest form of consumer debt and prevents many in the workforce from fully contributing to our economy,” said Rep. Davis.
In fact, according to the Federal Reserve, student loan debt is impacting home ownership in the United States, with rates for people aged 24 to 32 down by 9 percentage points between 2005 and 2014. The Fed in its January Consumer & Community Context publication estimated that 20 percent of this decline is a direct result of student loan debt.
“Student loan debt is such a major issue that some private companies have found that offering a benefit to help employees pay down their student loans has allowed them to recruit and retain young talent,” Rep. Davis said, noting that H.R. 1043 “builds on this private-sector approach to addressing the student loan debt crisis.”
H.R. 1043 would permit this benefit to be tax-free to both the employee and the employer, added the congressman.
Rep. Peters pointed out that the collective debt among students in the U.S. totals more than $1.5 trillion, negatively impacting the nation’s economic growth. Solving the student debt crisis, he said, would help the economy “when Americans begin making investments like buying a home, starting a family, or saving for retirement.”
Rep. Davis first introduced the bill in the 114th Congress, and Rep. Peters joined him to reintroduce it in the 115th Congress, according to a statement from Davis’ office.
The new bill, H.R. 1043, has been referred to the U.S. House Ways and Means Committee for consideration.