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senate Bill S. 3595

Should Employers Be Allowed to Make Tax-Free Contributions to Reducing Employees’ Student Loan Debt?

Argument in favor

Student loan debt is a growing problem in the U.S., and it’s making it harder for recent graduates to get ahead, start saving for the future, and secure their financial futures. Employers who want to help their employees with student loan debt should be incentivized to do so.

SneakyPete's Opinion
···
11/23/2018
S. 3595 AKA the Student Loan Repayment Acceleration Act I’m in support and strongly recommend the passage of Senate bill S. 3595 AKA the Student Loan Repayment Acceleration Act — would exclude employer contributions to student loan repayments from business income for tax purposes. It’d allow employers to make contributions of up to $10,000 a year towards each employee’s student loan debt free from payroll, income, and federal unemployment tax. Employers would be free to choose from a variety of ways to structure these payments, including simply making the payment or requiring the employee to make a payment that the employer “matches” (similar to 401K matches). Student loan debt is a growing problem in the U.S., and it’s making it harder for recent graduates to get ahead, start saving for the future, and secure their financial futures. Employers who want to help their employees with student loan debt should be incentivized to do so. SneakyPete..... 👍🏻👍🏻👍🏻👍🏻. 11*23*18.....
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Ron's Opinion
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11/23/2018
The real problem is the cost to attend college but this bill will help a student lower his debt which is needed right now. I’m old enough to remember when most companies reimbursed students and it worked. Digital Equipment Corp paid for my Bachelor and Masters degrees which was tax deductible so I say Yea.
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Aimee's Opinion
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11/23/2018
Without additional help, I won't pay my loans off for another 10 years. That's just in time for my own kids to start college and for me to take on loans for them. 11 years of paying on time hasn't lightened the load. Our student loan system is broken and needs to be fixed!
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Argument opposed

This legislation would likely have a major impact on federal tax revenue. Given that the country is already in a budget deficit, it’d be fiscally irresponsible to extend tax concessions to businesses simply for helping pay down student debt.

Mark's Opinion
···
11/23/2018
I have to say no. Instead, tackle the source of the problem. The universities themselves! A serious problem for more than 40 years, charging insane tuition and raising their rates on average 17% year-over-year with zero oversight. Universities know they can get away with it because our system of student loan underwriting in this country allows and encourages them to do it. These schools are absolute thieves. Nothing more nothing less. You’re paying massive dollars for socialist indoctrination with no guarantee whatsoever of improving your life by holding a degree!
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Thelma's Opinion
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11/23/2018
This is a bill written by a Republican to benefit businesses, not Americans. College should be free and all current loans expunged. America puts herself at risk by making education unaffordable.
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burrkitty's Opinion
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11/23/2018
There are so many things wrong with this and so many reasons why I’m not even sure where to start. This is the recreation of indentured servitude.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The house has not voted
  • The senate has not voted
      senate Committees
      Committee on Finance
    IntroducedOctober 11th, 2018

What is Senate Bill S. 3595?

This bill — the Student Loan Repayment Acceleration Act — would exclude employer contributions to student loan repayments from business income for tax purposes. It’d allow employers to make contributions of up to $10,000 a year towards each employee’s student loan debt free from payroll, income, and federal unemployment tax. Employers would be free to choose from a variety of ways to structure these payments, including simply making the payment or requiring the employee to make a payment that the employer “matches” (similar to 401K matches).

Sole-proprietors, employed, and self-employed individuals would be allowed to claim student loan debt as an above-the-line deduction of up to $10,000 a year. They would, however, not be allowed to claim double benefits via the student loan interest deduction.

Impact

Holders of student loan debt; employers; and the Internal Revenue Service.

Cost of Senate Bill S. 3595

A CBO cost estimate is unavailable.

More Information

In-DepthSen. Cory Gardner (R-CO) introduced this bill, which is based off the current format many employers use to contribute to employees’ 401K plans, to allow employers to make tax-free contributions of up to $10,000 toward employees’ student loans each year:

“Student loan debt makes it harder and harder for graduates to get ahead. I’m hopeful my legislation can make it easier to pay off loans by allowing employers to contribute to their employees’ student loans like many do for 401k plans. Every little bit helps and this can be a model for further policies to deal with the growing problem of student loan debt.”

Rachel Beck, vice president of the Colorado Springs Chamber and Economic Development Corporation, supports this legislation as a way to support her area’s high demand for highly-skilled workers:

“Th[ere] are jobs that require a lot of education, and a lot of education means a lot of debt. So we are, in the Pikes Peak Region, potentially looking at a lot of employees that could benefit from this proposal… If you’re an employee, and you’re comparing two different job offers, and one of them includes another $5,000 to $10,000 benefit, that’s a pretty significant boost for one over the other.”

Wayne Thorsen, SVP of marketing and brand partnerships at SoFi, argues that student loan assistance should be a “401(k) of the future”:

“People often face a hard choice between saving for retirement or paying down student debt when the answer is they should and can do both. We think about this employee benefit as a 401(k) of the future… The Millennial generation, now the largest percentage of the workforce, are starting their careers with record-setting student loan debt and deferring important priorities like retirement savings or buying their first home.”

number of companies, including Fidelity, Hewlett-Packard Enterprises, PwC, Esté Lauder, Abbott, and IBM, already offer some form of student loan assistance. Increasingly, companies are using student loan assistance as a benefit to attract job candidates.

Rep. Julia Brownly (D-CA) introduced legislation similar to this last year. Her bill, which would have created a special business tax credit for employers who try to help their workers pay off their debts, has gone nowhere, largely due to concerns about the reduction in federal revenue that would be produced by this legislation.


Of NoteAccording to the National Association of Realtors, about 45 million Americans have student loans to repay. In 2014, seven out of 10 college graduates had student loan debt. The average student has around $30,000 in debt, and a fifth of those with student loan debt owe over $100,000. Collectively, Americans owe a record $1.5 trillion in student loans, according to Federal Reserve data from the second quarter of 2018.

Today, the average U.S. household has 828% more student loan debt than in 1999, and student loan debt is the leading type of debt for American households.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / BrianAJackson)

AKA

Student Loan Repayment Acceleration Act

Official Title

A bill to amend the Internal Revenue Code of 1986 to exclude employer contributions to student loan repayment from income, and for other purposes.

    S. 3595 AKA the Student Loan Repayment Acceleration Act I’m in support and strongly recommend the passage of Senate bill S. 3595 AKA the Student Loan Repayment Acceleration Act — would exclude employer contributions to student loan repayments from business income for tax purposes. It’d allow employers to make contributions of up to $10,000 a year towards each employee’s student loan debt free from payroll, income, and federal unemployment tax. Employers would be free to choose from a variety of ways to structure these payments, including simply making the payment or requiring the employee to make a payment that the employer “matches” (similar to 401K matches). Student loan debt is a growing problem in the U.S., and it’s making it harder for recent graduates to get ahead, start saving for the future, and secure their financial futures. Employers who want to help their employees with student loan debt should be incentivized to do so. SneakyPete..... 👍🏻👍🏻👍🏻👍🏻. 11*23*18.....
    Like (54)
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    I have to say no. Instead, tackle the source of the problem. The universities themselves! A serious problem for more than 40 years, charging insane tuition and raising their rates on average 17% year-over-year with zero oversight. Universities know they can get away with it because our system of student loan underwriting in this country allows and encourages them to do it. These schools are absolute thieves. Nothing more nothing less. You’re paying massive dollars for socialist indoctrination with no guarantee whatsoever of improving your life by holding a degree!
    Like (120)
    Follow
    Share
    This is a bill written by a Republican to benefit businesses, not Americans. College should be free and all current loans expunged. America puts herself at risk by making education unaffordable.
    Like (62)
    Follow
    Share
    The real problem is the cost to attend college but this bill will help a student lower his debt which is needed right now. I’m old enough to remember when most companies reimbursed students and it worked. Digital Equipment Corp paid for my Bachelor and Masters degrees which was tax deductible so I say Yea.
    Like (41)
    Follow
    Share
    Without additional help, I won't pay my loans off for another 10 years. That's just in time for my own kids to start college and for me to take on loans for them. 11 years of paying on time hasn't lightened the load. Our student loan system is broken and needs to be fixed!
    Like (27)
    Follow
    Share
    There are so many things wrong with this and so many reasons why I’m not even sure where to start. This is the recreation of indentured servitude.
    Like (24)
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    So an employer can offer lower wages still by offering to pick up your student debt or a portion of it. That further essentially puts the graduate in indentured servitude and ties them to that company until it’s at least paid. It’s the same concept that regional airlines tried where they charged you huge sums to get hired due to them having to train you to fly that type of airplane. Since dropped. Just pay decent wages and the student can pay it themselves as well as actually want to work at the company. If you want to make it tax free to pay the loan that would be a good start. Remove the tax liability if money is paid to a student loan just like a 401k and remove the yearly limit. Id rather eat C rations now and sock more money away but I can’t.
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    This isn’t addressing the actual root causes of student loan debt. We need legislation to help fix these issues directly instead of helping corporations get some tax breaks.
    Like (16)
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    At first I said yeah great idea but now that I think about it more, this won’t fix the issue of the price being too high anyway. More importantly, people would be more inclined to work for businesses that offer this. Small businesses would most likely not be too involved in this and would hurt many of them in the long run I believe.
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    It sounds good but it's tuition that's the real problem. Public schools should be free. Private schools should be more affordable so that a person is not overwhelmed with debt when they're just starting out. Students shouldn't have to work three jobs to go to school. You used to be able to send yourself to college working minimum wage jobs. Minimum wage hasn't caught up with the cost of an education.
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    So I put my college-bound student on the business payroll and deduct $10,000 as a tax-free contribution towards his education, also lowering my taxable business income. Sweet if you can swing it. Is it possible I’m missing some nuance to this proposed bill? Sen Gardner doesn't always follow conservative thinking.
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    It’s an agist tax loophole for corporations. Favors the students that picked degrees in which corporations and wealthy companies can afford to cover the debt. Marginalizes careers and students that go into social services and public services.
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    The deficit is high enough. If employers are really concerned about the difficulty for their employees to repay their student loans and they have a true interest in their employees financial well being the tax shouldn’t matter. What about the employees receiving this bonus, would this count as taxable income?
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    Yes, but why did the republicans refuse to pass the democrat version of this bill? What differs between the two bill proposals? Instead of simply rejecting a democrat bill to resubmit the same bill under republican sponsorship work together and stop wasting tax payer money.
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    No more tax breaks for Corporations! Instead make free education to all, allowing the poorest to change there lives! I for one went to college in 1982-1985, and just paid my GSL in 2010.
    Like (6)
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    In fact, all compensation should be tax free, because there is no reason that government can justify taking any portion of your income, regardless of the form it takes. Don't take what isn't yours. That's day one of preschool. No special exceptions, not even for government. If you take something that isn't yours, you're stealing.
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    I appreciate the Representative’s position on this but I, as a fiscally responsible Conservative, believe that we do not need to incentivize companies to be a good company to work for. Yes Student Debt is an increasing problem in the United States but that is why when you get to college, you focus on what you’re doing and get the job done. Then after college, you get a job in that field. Now I encourage the honorable member from Colorado, who’s statement on the issue reflected his regions increasing student debt crisis, to make this a state issue. I for one will not work my butt off to bring down my own student debt from being in college for 5 years while paying my taxes to help others pay their debt down. Taxes at the Federal level, although a major drain on the population but needed for some programs, should be going towards stabilizing our military forces and other foreign projects and programs. Subsidies and incentivizing should come from states where the taxes should be higher and federal taxes should be lower.
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    I believe employees should be concerned when employers become to involved in personal issues. A annual bonus award using agreed to objectives and measurements , leaves you in the decision process, of how you distribute your money. Do exceptional work, take on more responsibilities and promote your employer at every opportunity. Don’t let someone else control how you earn and spend those dollars. Corporations do not want to be big brother. That’s what liberals have tried to do since Eisenhower. The decision to acquire student loan was yours. Now that President Trump and his staff created a new vibrant economy, you have the opportunity for an entry management job. Don’t wait to find yourself or the perfect job. Get off your a— and promote yourself. Corporations are not babysitters.
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    Cut taxes AND balance the budget.
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    This does not address the real problem which is the fact that the cost of higher education is too high! These giant corporations don’t need another tax break!
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