Thune, Warner Introduce Legislation to Aid Student Debt Repayment
Legislation would allow employers to offer tax-free student loan assistance to help their employees pay off student loan debt
WASHINGTON — U.S. Sens. John Thune (R-S.D.) and Mark Warner (D-Va.) this week introduced legislation to help Americans tackle their student loan debt. The Employer Participation in Repayment Act would allow employers to contribute up to $5,250 tax-free to their employees’ student loans – providing employees with much-needed relief and employers with a unique tool to attract and retain talented employees.
“Today’s economy is strong, and I believe we should keep our foot on the gas by passing common-sense bills like the one Sen. Warner and I have proposed that would give young career seekers additional tools to help overcome the burden of student loan debt and empower employers to attract future talent,” said Thune. “It’s no secret that as today’s college graduates look toward the next chapter in life, they often trade their cap and gown for debt and uncertainty. This bipartisan legislation, which I view as a win-win for graduates and employers, is good policy and one that I hope garners strong support.”
“As the first in my family to graduate from college, I relied on student loans when college tuition was much lower than it is today,” said Sen. Warner. “Unfortunately as the cost of higher education continues to skyrocket, so has the rate of Americans who turn to student loans to pay for college. Today too many Americans are saddled with tough to manage student loan debt with no end in sight. That’s why I’ve teamed up with Sen. Thune to create an innovative, bipartisan approach to help ease the burden of student loans. By making employer student loan repayments tax-exempt, employers will have a new tool to recruit and retain a talented workforce while also helping working Americans manage their financial future.”
According to reports, one in four Americans have student loans, and student debt in the U.S. reached $1.5 trillion in 2018. Student debt is a significant financial burden that not only influences the way our workforce saves and spends, but also has a stifling effect on the economy. The Warner-Thune bill would update an existing federal program so that it works better for employees living with the reality of burdensome student loan debt. The Employer Education Assistance Program, as currently written, only provides assistance for workers who are seeking additional education. It does not extend to individuals who have already incurred student loan debt during their undergraduate or graduate studies.
Additional cosponsors of the bill include U.S. Sens. Richard Blumenthal (D-Conn.), Roy Blunt (R-Mo.), Shelley Moore Capito (R-W.V.), Susan Collins (R-Maine), Cory Gardner (R-Colo.), Maggie Hassan (D-N.H.), John Hoeven (R-N.D.), Doug Jones (D-Ala.), Angus King (I-Maine), Ed Markey (D-Mass.), Chris Murphy (D-Conn.), Pat Roberts (R-Kan.), Mike Rounds (R-S.D.), Jacky Rosen (D-Nev.), Kyrsten Sinema (D-Ariz.), Jon Tester (D-Mont.), and Todd Young (R-Ind.).
The legislation has also been introduced in the House of Representatives by Reps. Rodney Davis (R-Ill.) and Scott Peters (D-Calif.) and has support from numerous educational organizations.
“Too many individuals and families are being hindered by the financial burden of their post-secondary education. Student borrowers deserve access to a broad range of repayment options and loan forgiveness programs that address their variety of needs,” said Marc Egan, Director of Government Relations, National Education Association (NEA). “The NEA is proud to support Congressmen Scott Peters, Rodney Davis, Senators Mark Warner, and John Thune in creating new pathways for individuals to repay their student loans to make college more affordable and accessible for all.”
“The National Association of Independent Colleges and Universities fully supports The Employer Participation in Student Loan Assistance Act of 2019 and Reps. Peters and Davis’s efforts to expand IRC Sec. 127 to allow employers to offer both tuition and loan repayment assistance to their employees,” said Dr. David L. Warren, President, National Association of Independent Colleges and Universities (NAICU). “Incentives like Sec. 127 encourage employers to invest in the education and training of employees at all levels, which ultimately benefits society and the economy. Expanding this benefit to allow employees to also use this tax-free assistance for student loan repayment helps the employees at two vital stages of financing their education. Improving this benefit will encourage more employer and employee participation, and result in a more educated and skilled workforce across the U.S.”
“The National Association of College and University Business Officers (NACUBO) commends Sen. Mark Warner and Rep. Scott Peters for introducing the Employer Participation in Repayment Act,” said Susan Whealler Johnston, PhD, President and CEO, National Association of College and University Business Officers (NACUBO). “The benefits currently offered by Section 127 of the tax code are an important tool for employers to attract the best possible employees and build a skilled workforce. While Section 127 is currently a valuable tool in supporting U.S. competitiveness it could, upon passage of the Employer Participation in Repayment Act, become the benefit of choice for tuition assistance and loan repayments among employers. Expansion of Section 127 would benefit employers, employees, students, and families, and help both institutions of higher learning and the U.S. workforce retain a top spot on the global stage.”
“The enhanced ability for employers to contribute to student loan repayment represents an important opportunity to reduce student debt levels,” said J. Noah Brown, President & CEO, Association of Community College Trustees. “We commend Senator Warner and Representative Peters for looking into this issue, as it may assist many community college students who borrow to pay for the cost of attendance of postsecondary education.”
“Students shouldn’t be forced to look toward a future of being stuck in debt, especially when we have so much to offer the workforce and the world,” said Sarah Henry, Director of Legislative Affairs, The Association of Big Ten Students. “As the cost of a college education continues to rise, it is increasingly vital that students have access to programs and resources to assist in loan repayment and forgiveness. The Association of Big Ten Students supports the efforts of Congressmen Rodney Davis and Scott Peters and Senators John Thune and Mark Warner in making a debt-free life more accessible for all and encourages the implementation of programs to reduce student loan debt across the country.”
“In today’s competitive job market, leading-edge benefits are the most powerful tool employers can wield to attract and retain talented workers,” said Johnny C. Taylor, Jr., SHRM-SCP, President and Chief Executive Officer, Society for Human Resource Management (SHRM). “At SHRM, we advocate for efforts that create better workplaces and a better world. We strongly support The Employer Participation in Repayment Act, and I applaud Representatives Peters and Davis, and Senators Warner and Thune for their bold leadership on this critical issue. Expanding employer education assistance helps address the skills gap, which is holding back both workers and employers. When employers are able to help workers pay off student debt, more people will have confidence to pursue higher education and be better prepared to fill high-skilled fields.”
Full text of the legislation can be found here. A summary of the legislation can be found here.
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There is a simple enough method to calculate how much you can afford to borrow: look at the starting salary you can expect to earn your first year out, and that figure, whatever it is, is the total you can afford to borrow for that degree. Any more than that and you will not make enough money to pay off the debt.
This will be a big problem for the social justice and gender studies graduates, but they should be advised of that before they get started, and major in something else.
What is that going to cost those of us who didn’t get our student loans paid for? If you can’t afford college maybe get a job first for a while.
Since 1985, the CPI has risen 115%, and wages 147%, meanwhile college tuition has risen 500%.
More “I got mine, F-you” from the right.
The more financial assistance available, the higher the price.
The universities will charge whatever the market will bear. The prices have gone up because the market can bear them. The market bears them because of the amount of financial aid available.
If student loans were like mortgages, where the financial institution takes a good look at both the borrower and the property, a lot of borrowers would be ineligible because of a lack of demonstrable academic success, and a lot of the properties, meaning the colleges and the degrees sought, would be ineligible because a lack of employability of their graduates. The financial institutions would simply refuse to lend money to marginal students seeking worthless degrees. They would lend money only to the students most likely to graduate, seeking marketable degrees from the best schools.
As long as anybody with a 2.0 average can get a student loan to pursue a degree nobody values, college tuition will continue to rise.
It just comes across as disingenuous when boomers lecture millenials on “smart student debt” when boomers could pay off college working 20 hours a week while they attended school. Further, it is boomer policies and administrations that contributed to the crazy cost. My generation gets saddled with the results and then are told we are irresponsible by the generation who made things this way. It gets really, really old.
agreed. i had $18 per credit hour tuition in ‘78 when i was in college and feel real pain that even with the COL difference factored in my kids had no shot at something that affordable.
Hold on – the function of college is not to create workers. The function of college is to educate the citizenry. While not mutually exclusive, I think you’ve lost sight of the fact that college is a service, not a product. Your idea of what constitutes a “useless” degree pigeonholes you into thinking that the only use for education is for getting a job. This is decidedly untrue – an educated citizenry makes our nation a more robust, adaptive, and forward-thinking populace regardless of whether or not you can get a job in “your field”. A womens studies graduate can bring insight to a number of areas to develop, and enhance (exploit?) the standing of half our society – be it engaging in marketing to that demographic, inclusivity in the workplace, encouraging young women into pursuing STEM degrees, etc.
Second, I don’t refute your point that more financial aid is one of the culprits, but there many others – i.e., surging demand, the loss of state funding, the need for more faculty, the need for more and more non-educational staff and money to pay them, and ballooning student services like climbing walls and lazy rivers. Trying to simplify it down to ONE cause is lazy and willfully ignorant.
Have you thought about going back to school and rectifying your inability to think critically and hold complex ideas in your noggin?
College educations used to be exclusively for the gentry and aristocracy, the people who didn’t actually have to work for a living.
A liberal education can be obtained for the cost of internet access and a few overdue library fines. Nobody has to travel to a college campus and listen to a professor to get a liberal education any more. Those days are over. They’ve been over since the invention of the printing press, and it is amazing it’s taken this long for civilization to catch up.
College is now ridiculously expensive. The money spent would be better invested in starting a small business. Unless you need a college degree to pursue a particular career, there’s no point in going.
You can stay home and read all the great philosophical works in your pajamas.
Anne makes several good & valid points but (for the moment) I’m curious about the mechanics of Senator Thune’s bill. Am I correct that it allows an employer to pay down $5250 of each employee’s student debt? So, presumably, the employer pays the worker less per month but the worker is happy b/c her note is reduced. If she received the $5250 in direct compensation, she’d probably owe tax on it. She avoids the dead weight loss & gains maybe $750/ annum. Meanwhile, society benefits b/c we want student loan debtors to pay off debt (not default and crash the system). Right now, I’m not sure how the employer benefits. Accounting-wise, it seems a neutral, but there will be (inevitably) set up costs as well as compliance costs. I guess I should just go read the darn thing…
Government owns the student loan business. Thank you #44.
I guess it is standard for a liberal to think it is harsh for kids to have to work.
How about getting rid of all the liberal, nonsensical degrees that are eating up resources on campuses?
Why should my tax dollars pay for liberal indoctrination of kids?
More “everything is free-we can do it better than Venezuela” from the left.
Who said anything about not working? People who can, should. End. Of. Story.
As to your other… um, “point”, I guess? Re-read what I said about the function of college. Education is not a product. Education is a service. That service will increase the robustness, knowledge, adaptability, and progression of our nation. Just because it’s difficult to put a dollar sign on those benefits, you dismiss out-of-hand those real and tangible benefits that make us all better people.
Nobody is expecting anything for free, here. Everyone understands that services like education cost money. It’s how much, and more to the point, how much MORE it costs now vs. whatever day back in history you think was better. If we take the rate of price increases for things like gas, wages, and food vs. things like healthcare, housing, and education, you’ll see that those increases are wildly different between the two. So while you got to run a 100m dash, nowdays kids have to run 120m dash and are expected to perform as well as you did.
I know what I paid for college back in the 80s. I am now putting 2 kids through college. Holy crap, it’s expensive. I was able to set aside most of their costs through regular contributions to their 529s, but now with grad school looming for one, the money is running out… so if you’ve got a spare $60,000 laying around, I could use a hand. Unless you think hearing-impaired children don’t require any help? The only jobs in that field require a masters at minimum, unless you’re willing to work for a school district for teacher-level pay, which won’t begin to recoup the costs of a college degree in South Dakota.
A bit chicken-and-egg dontcha think? So let’s address the actual issue here – that some areas of our society have spiraling cost increases, while wages are rising much more slowly – NOT whether or not you think certain degrees are of any value.
College should NOT be about jobs. Until we squash that idea, I’m not sure there’s much of a discussion to be had since no one can agree on the function and what we’re trying to achieve.
Disparate impact laid the foundation for the college bubble and the depreciating value of the high-school education by establishing the baccalaureate degree as the barrier of entry to the middle class. Businesses no longer administer aptitude tests under threat of lawsuits from those who fail.
If businesses were allowed to recruit and screen candidates using testing, workers could start working earlier, advance quicker, and do it debt-free.
Where are you getting this information from? Employers are always testing applicants for skilled labor positions. The local electric coop forces their applicants to climb poles and quizzes them on their knowledge. Pretty much everyone in the tech industry gets quizzed on their specific pine of work from security exams to programming tests. Even welders and mechanics will have to perform basic tasks to prove their worth. Just about the only job that I haven’t been tested on prior to being hired was working in a kitchen through college.
Employers testing for job specific skills, in some fields are able to defend their testing, so it still occurs. That said, most fields require some type of credentialing, rather than a demonstration of skills, or aptitude for acquiring them them with on the job training.
“In the pre-Griggs world, companies used aptitude tests to screen applicants—an approach borrowed from the military during World War II. Exams worked for the employer because they were simple, cheap and, most of all, effective, favoring raw talent above all else. “Despite their imperfections, tests and criteria such as those at issue in Griggs (which are heavily…dependent on cognitive ability) remain the best predictors of performance for jobs at all levels of complexity,” University of Pennsylvania professor Amy Wax found.”
http://thefederalist.com/2015/06/26/disparate-impact-anthony-kennedys-economic-time-bomb/
This is simply one step down the road of enslaving debtors to their employers. If the employer pays down a certain portion of their debt, the debtor becomes legally beholden to the employer to render services at a reduced wage for a specified period of time.
This does zero in addressing the exploding cost of a biased education. In fact, it does the opposite. Is it any wonder why we are where we are ?
Yet another artificial government incentive that ultimately transfers wealth from the hands of the Americans who produce it into the hands of the freeloading, parasitic anti-Christian bigots who dominate our public university system.
John Thune is a phony and an idiot.
parasitic anti-Christian bigots who dominate our public university system? Good Golly! Without federal funds South Dakota would not be able to make it’s state budget. It is a red moocher state with blue states you despise paying more than what they get back.
South Dakota should pay it’s own way and only get back what it pays in and after that we can talk ok?
When government takes $10,000 dollars from you and wastes $15,000 buying you things you don’t need or want, that isn’t a net gain.
Hear, here!
excuses and that is the government you voted for.
Again, college is based on a pre-Renaissance model of education, where knowledge was stored in libraries of hand-written books and imparted orally by professors who had spent years reading those manuscripts.
The only way to access that information was to travel to those locations, read the books stored there and listen to lectures.
By the 19th century the public libraries had plenty of books and people were going to college for social reasons having very little to do with education. And here we are: sending our kids off to college because we don’t know what else to do with them, but we really really really want to get them out of the house.
I believe a strong case can be made, that beginning with Griggs vs Duke Power Company, when the Supreme Court first ruled that “aptitude tests” resulted in disparate impact, “a series of court rulings and subsequent legislation, a cumbersome set of legal rules has developed that make it difficult for employers to use testing to find out if an applicant is intelligent, capable, and diligent. As we will see, fear of litigation is always in the background. For many jobs, a college degree has become an alternate means of “testing.”
“The hypothesis of this paper is that Griggs turned a college degree into a “credential.” The content of the education did not change, but the degree—the sheepskin—became a necessary first step for a decent job.
While this paper does not “prove” the educational and economic consequences of Griggs, it suggests that additional scholarly work on the impact of Griggs on higher education is appropriate.”
Griggs v. Duke Power: Implications for College Credentialing
https://www.jamesgmartin.center/acrobat/Griggs_vs_Duke_Power.pdf