As more individuals grapple with rising student loan debt, U.S. Rep. Steve Stivers (R-OH) introduced legislation that would make student loan repayment programs offered by employers more attractive by helping borrowers pay less taxes on their education.
“Students and recent graduates often face difficult financial hardship paying for their student loans with entry level jobs,” Stivers said. “There is no doubt that student loan debt can be a major obstacle in building a solid financial future.”
The Student Loan Debt Relief Act, which Stivers introduced with U.S. Rep. Terri Sewell (D-AL), would reclassify employer student loan repayment programs as a non-taxable benefit and would increase the limit on tax-free educational assistance to $10,000.
Under current law, employers can provide student loan assistance and repayment benefits for their employees, but the IRS classifies the programs as taxable income. By eliminating that classification and the additional taxes, Stivers said employees would be able to save more of their paychecks.
The measure would also double the amount of tax-deductible interest on student loans from $2,500 to $5,000 per year. Additionally, the income ceiling for interest deduction eligibility would increase from $80,000 to $150,000 for single filers and from $160,000 to $250,000 for joint filers.
“While this is just one step to addressing the cost of higher education, I am proud to support a stronger student loan repayment program to relieve the burden on the next generation,” Stivers said.
The average graduate in 2016 has $37,172 in student loan debt, up 6 percent from the previous year, according to the U.S. Department of Education.
“We cannot allow student loan debt to keep the American dream out of reach for our youngest generation,” Sewell said.