Only a handful of companies offer to help their workers pay off their student loans. But a new bill in Congress aims to expand that benefit.
On Thursday, a bipartisan group of 31 lawmakers sponsored legislation that would encourage companies to give their workers money to help pay off their student debt.
The bill would make employer contributions to your student loan payments tax deductible — not unlike contributions companies make to their workers’ 401(k)s.
It’s a benefit that a small but growing group of companies started offering in the past two years.
“Some companies are already offering this benefit because they see the advantage it gives them when recruiting and retaining younger employees, but we want to encourage more to participate so we can help both struggling graduates and our economy,” said Representative Rodney Davis, a Republican from Illinois who introduced the bill along with Representative Scott Peters, a Democrat from California.
Consulting firm PwC was one of the first companies to start offering a student loan benefit last year. The company offers new employees $1,200 a year toward their loans for up to six years.
Since then, companies including Fidelity, Prudential, Staples, Aetna, Live Nation, and Natixis Global Asset Management have launched similar plans. But just 4% of companies offer a student loan repayment benefit, according to the Society for Human Resource Management. They have an average maximum benefit of about $4,400 a year.
If passed, the legislation would make a company’s contribution of up to $5,250 per year tax-exempt.
“Adding tax relief to the equation could elevate student loan assistance alongside 401(k) contribution as one of the most valuable financial benefits a company can offer its workers that directly impact their quality of life today,” said Scott Thompson, the CEO of Tuition IO, a company that helps employers put student loan benefit plans in place.
Nearly one in seven undergraduates leaves school with some debt. On average, each owes about $30,100.