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(WASHINGTON, DC) - Today, Congresswoman Nicole Malliotakis (NY-11), Rep. Scott Peters (CA-50), and U.S. Senators John Thune (R-SD) and Mark Warner (D-VA) introduced the Employer Participation in Repayment Act, bipartisan and bicameral legislation that will continue allowing students and college graduates to receive tax-free reimbursement for necessary expenses to pursue higher education.
Currently, Section 127 allows employers to provide up to $5,250 in tax-free reimbursement for repaying student loans, paying tuition, and purchasing required books, supplies, and equipment for students' courses. This legislation, initially included in the March 2020 CARES Act, will eliminate the current end date set for this provision, which is the end of 2025.
"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," Congresswoman Malliotakis said. "Our bipartisan legislation will allow millions of students and recent graduates to continue receiving reimbursement through their employer up to $5,250 per year tax-free, which can be used to repay student loans, pay tuition, and purchase required books, supplies, and equipment for academic courses. This tax incentive will continue to strengthen our workforce, increase our nation’s competitiveness, and provide much-needed economic relief to millions of Americans who are struggling to make ends meet during this time of record-high inflation."
“I relied on student loans to get through college when the cost of higher education was much lower than it is today. Now, the collective debt among Americans is $1.7 trillion, which limits our economic growth and young people’s economic prospects,” said Congressman Peters. “Over the last four years, this program has been a huge success — helping employers pay off thousands of employees’ loans and 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.”
“Incentivizing employers to help repay their employees’ student loans was a common-sense step Congress took to address the high levels of student debt that borrowers face,” said Senator Thune. “The Warner-Thune 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.”
“Too many young Americans are struggling under the weight of student debt, preventing them from establishing savings, buying homes, and building wealth,” said Senator Warner. “My Employer Participation in Repayment Act took an important step to help folks pay down their debt while also giving employers a powerful tool to recruit and retain the best talent, but it’s set to expire soon. I’m proud to be pushing to make this benefit permanent so we can grow our economy and support the middle class by supporting recent graduates and employers alike.”
“Employers and workers alike have benefited from the COVID-era laws allowing Section 127 benefits to be provided to employees for the purpose of repaying student loans." said Andy Brantley, President and Chief Executive Officer at the College and University Professional Association for Human Resources "Unfortunately, when the bills were signed into law, Congress included an expiration date for the end of 2025, meaning employees could soon be stripped of a benefit that has eased the financial burden of repaying costly loans during a time of high inflation, and employers could lose a benefit they have offered to attract and retain employees. CUPA-HR therefore fully supports this bill to ensure modern Section 127 benefits are made permanent."
“The American Council on Education strongly supports the “Employer Participation in Repayment Act,” which would make permanent the CARES Act expansion of Sec. 127 to cover student loan repayment assistance." said American Council on Education (ACE). "Many Americans are paying off student loans while balancing the needs of their families and achieving new skills to advance in their careers. This legislation would provide employers the opportunity to support their employees in pursuing education and/or to manage their student loan debt, which represents a win-win for employers and employees. This expansion of Sec. 127 potentially also could generate substantial private sector funds for student loan repayment through a new public-private partnership to help ease the burden of future and current student loan debt on students and recent graduates. Thank you for your leadership on this important issue.”
"Extending the tax exclusion for employer-provided student loan repayment assistance is crucial for today’s U.S. workforce and is 100% aligned with employer perspectives on these benefits," says Scott Thompson, CEO of Tuition.io. "As the cost of higher education continues to skyrocket, this benefit enables companies to foster a more educated and skilled workforce, while helping their employees cover basic living expenses, a challenge for so many people today. Since Tuition.io started administering contributions in 2016, employers on our platform have helped pay down student loan debt for hundreds of thousands of employees in key sectors like healthcare, manufacturing, and technology. We at Tuition.io strongly support making these benefits under Section 127 permanent, as their removal would be a significant setback for both corporations and their employees."
“Candidly applauds the bipartisan introduction of the permanent extension of the Employer Participation in Repayment Act. Employers across the private and public sector are eager to embrace this benefit. Certainty around the permanent extension will move market adoption from a new category of benefit into a new normal across employers at large. And the data is clear and compelling for all stakeholders involved: Employers using our platform to facilitate student loan repayment have generated over $1 billion in student debt impact since 2016, helping employees save a median of $16,000. Employees who receive tax-free employer contributions are 76% less likely to turnover, and are on track to become debt-free five years faster on average. Making this provision permanent is a win-win-win, providing relief for employees, a powerful retention tool for employers, and an estimated $247 billion in government revenues over a decade,” said Laurel Taylor, CEO of Candidly.
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