Legislation introduced by U.S. Rep. Patrick Meehan (R-PA) this week would modernize tax code treatment of employer contributions toward student loan repayments in an effort to support young workers by tackling more than $1 trillion in student loan debt.
The Higher Education Loan Payments (HELP) for Students and Parents Act would exclude from income up to $5,250 in employer contributions toward student debt and establish a tax credit equivalent to 50 percent of the employer’s contribution.
“The average American student graduates with more than $37,000 in student debt and for too many middle class students, a college degree is simply out of reach all together,” Meehan said. “Many employers offer benefits like student loan repayment programs and matching contributions to college savings plans. These benefits ease the burden of debt and help make a college degree more obtainable for students. But our tax code offers no incentive to offer them. This bill will change that.”
Additionally, the HELP for Students and Parents Act, which Meehan introduced with U.S. Rep. Suzan DelBene (D-WA), would also exclude from income up to $5,250 that an employer contributes to a college savings account that an employee sets up for their child and provides a tax credit to employers based on 50 percent of the amount contributed.
“By incentivizing employers to offer these benefits to their employees, we can enable more students and families to access them,” Meehan said. “Ultimately it will help Americans graduate with less debt and get out from underneath their debt faster. I’m pleased to have the opportunity to work with Congresswoman DelBene on this effort to make college more affordable for American families.”
Only 3 percent of companies currently offer employer contributions toward an employee’s student loan repayments, partly because they lack a tax advantage to do so.
David Aronson, the CEO of Peanut Butter, a company that helps companies attract employees through student loan repayment incentives, applauded the HELP Students and Parents Act.
“As a company that works with employers across the country to provide student loan assistance programs that help employees tackle student debt, Peanut Butter recognizes and applauds Rep. Pat Meehan’s HELP for Students and Parents Act as an important tool to align the interests of employers, citizens, and federal government in resolving America’s student debt crisis,” Aronson said.