44-million Americans have accumulated a total of a trillion and a half dollars in student loan debt. One idea before Congress would allow companies to offer tax-free aid to employees to help pay down their loans. The proposal has bipartisan support on Capitol Hill but it’s gotten bogged down by politics
24-year-old Juan Navarro works in the corporate offices of Fareway, a chain of grocery stores based in Iowa. He has more than $19,000 left to pay on his student loans.
“I didn’t really grasp until my junior year of college when I said, ‘Wow, I’m going to be graduating next year, and I’m going to have all this debt,'” Navarro said.
Navarro is paying down his debt with the help of Fareway. The company is giving him roughly $5,000 to help erase his student loans.
“With this benefit now, I’m able to save money on interest and also to get rid of my student loan debt quicker,” Navarro said.
But the benefit is taxed, so Fareway and Navarro are waiting for Congress to sweeten the deal.
Currently, a company can contribute up to $5,250 tax-free each year for tuition assistance, helping workers who are attending classes while on the job. But no such tax break exists to help workers who are paying off student loans on degrees they’ve already earned.
A bill working its way through Congress would let companies do just that. Neither the company nor the employee would pay any tax on the money.
So far, companies like Starbucks, Verizon and Hewlett Packard support the legislation.
The athletic company New Balance said in a statement that if the bill passes, the company “will introduce a student loan repayment benefit. All we are waiting for is federal legislation…”
“This gives a win for the student and a win for the employer,” Senator Mark Warner, D-Va., said.
Democratic Senator Mark Warner and Republican John Thune are lead sponsors of the bill that would provide the tax break.
“So many students who go to our best colleges and universities, work really hard to get a degree and then they come out and trade in their cap and gown for a mountain of debt and uncertainty,” Sen. John Thune, R-S.D., said.
The idea is backed by more than two dozen other senators and more than 140 members of the House. But in the Senate, it will need to pass as part of a larger tax bill that’s yet to be introduced.
“Even in a place as dysfunctional as Washington, this one should be a no-brainer,” Warner said.
Navarro says the repayment benefit he’s already receiving has changed his life.
“I’m a little less stressed, a little more excited for my future what can hold as far as I will be out of debt sooner,” Navarro said.
This legislation now has an important White House ally. Ivanka Trump, the president’s daughter, said in a statement to CBS News that she supports the bill and hopes that Congress can set its differences aside and provide solutions.