Congressman Rodney Davis and Gwen Graham Introduce Bipartisan Employer Participation in Student Loan Assistance Act (H.R. 3861)
Congress is beginning to pay attention to the largest problem plaguing college graduates. With over 70% of graduates entering their post-college years in debt, the big question on their minds is how are they going to pay back their student loans.
Congressman Rodney Davis (R-IL) and Congresswoman Gwen Graham (D-FL) introduced a bipartisan piece of legislation that will help college grads with debt. The legislation allows employers to make payments to their employees student loans without subjecting these payments to taxes (within a $5,250 cap).
Why is this a big deal? Well, the tax code is biased when it comes to employer payments on educational assistance. Basically, if an employer helps their employees make tuition payments, they can exclude up to $5,250 per year from taxes. However, if an employer helps their employees make payments to their student loan debt, the payments are fully taxed.
Congressmen Davis and Graham understand this tax bias, and that's why they are trying to change the tax law to equalize tax treatment for employer-sponsored student debt payments. Changing tax laws is difficult, but at GradFin we believe we can make a case to Congress that employers can be involved more in helping their employees repay student debt.
Changing the tax laws on employer-sponsored repayments is very important for the economy. Rather than a portion of the debt repayment heading to the IRS, why shouldn't all of it head straight to the borrowers lender? That can make debt repayment faster, which will lead to more student borrowers getting out of debt earlier.
We all know that if student borrowers can get out of debt earlier, they are going to be in a better position to spend money on more efficient parts of our economy like purchasing a home or starting a business.
Take a look at the press release by Congressman Rodney Davis to learn more about the Employer Participation in Student Loan Assistance Act (H.R. 3861).
Check back with us here at GradFin in soon as we will be helping to find ways for your to get in touch with your Congressman to help spread the word about H.R. 3861. Let;s make a difference by challenging our leaders in Washington to pass legislation that helps Millennials face their number one post-college liability - student loan debt.
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