Tax-free student loan reimbursement program could be made permanent under this new bill

STATEN ISLAND, N.Y. -- A popular reimbursement program that allows employers to help their employees pursue higher education and pay off existing student loans could be made permanent courtesy of new federal legislation.

On Thursday, Rep. Nicole Malliotakis (R-Staten Island/South Brooklyn), alongside 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, which would allow students and college graduates to continue receiving tax-free reimbursement for necessary expenses to pursue higher education.

“Over the past 20 years, the cost to attend college has risen 45%, forcing students to choose between pursuing higher education and taking on tens of thousands of dollars in burdensome student loan debt,” Malliotakis said. “Our bipartisan legislation will allow millions of students and recent graduates to continue receiving reimbursement through their employer.”

The program, which 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, is currently set to expire at the end of 2025.

The new bill, if passed, would eliminate the current end date for the provision, making it permanent.

“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,” Malliotakis said.

With Americans currently owing a collective $1.7 trillion in student loan debt, officials say the program, which has already allowed employers to pay off thousands of employees’ loans since being established through the 2020 CARES Act, is a proven cost-effective solution to the student debt crisis.

“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 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.”