Gardner Authors Bill to Allow Employers to Contribute Tax Free to Employees’ Student Loans
Washington, DC- In a legislative effort to assist individuals with student loans, Senator Cory Gardner (R-CO) recently introduced the Student Loan Repayment Acceleration Act. This legislation allows employers to make tax-free contributions of up to $10,000 toward employees’ student loans per year. It is based off of the current format many employers use to contribute to employees’ 401k plans.
“Student loan debt makes it harder and harder for graduates to get ahead,” said Senator Gardner. “I’m hopeful my legislation can make it a 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.”
According to the National Association of Realtors, about 45 million Americans have student loans to repay. The average student has around $30,000 in debt, with a fifth owing more than $100,000.
Summary of Student Loan Repayment Acceleration Act
-Allows employers to make contributions to an employee’s existing student loan debt up to $10,000 per year free from payroll, income, and federal unemployment tax.
-Allows employers to choose from a variety of ways to structure such payments; for instance, the employer could simply make a payment or it could require the employee make a payment that the employer “matches” (similar to 401k matches).
-Would amend the Internal Revenue Code to exclude an employee’s contributions toward their existing student loan debt from taxable wages payments so long as the contributions do not exceed the $10,000 cap.
-Allows sole-proprietors, employed and self-employed individuals to claim student loan debt as an above the line deduction up to $10,000 per year.
- Denies sole-proprietors, employed and self-employed individuals from claiming double benefits of the student loan interest deduction.
Cory Gardner is a member of the U.S. Senate serving Colorado. He sits on the Energy & Natural Resources Committee, the Foreign Relations Committee, the Commerce, Science, & Transportation Committee, and the Budget Committee, and is the Chairman of the Subcommittee on East Asia, the Pacific, and International Cybersecurity Policy.
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