Participation in Student Loan Assistance Act: An Illinois Congressman Hopes to Help with Student Loan Debt
Employers across the USA have started creating programs to help their employees pay off their student loans, but Illinois hopes to take it all one step further.
Big news on the student loan front: an Illinois congressman is aiming to pass a bill which will make it easier for employers to attract potential employees, and for said employees to pay off their student loans.
How Will the Plan Help With Student Loans?
Republican congressman Rodney Davis, of Illinois, put his bill into the House just this week. The Employer Participation in Student Loan Assistance Act proposes that employers should be allowed to offer a tax free student loan benefit in addition to salary. Should the bill be put into action, employers will be allowed to offer anything up to $5,250 tax free as a benefit for student loan payments for their employees.
Similar programs have been implemented elsewhere, as we discussed a few weeks ago, but Davis argues that these benefits should be tax free, otherwise they simply aren’t fair. “When you get your W2,” he says, “that amount…is charged to you…You’re going to be able to actually get that benefit in addition to what you’re getting as a salary. And that employer is going to be able to use that as an incentive to hire you.”
What Would This Mean for Student Loan Holders?
The Employer Participation in Student Loan Assistance Act would be a huge incentive for graduates to seek work at the participating companies. While they might be able to find student loan benefit packages elsewhere, with the tax in place there will be fees and dues down the line that might complicate things.
A decrease in student loans with an increase in taxes due really isn’t much of a trade at all. A tax free way to pay down your student loan, in addition to a salary? Now that’s certainly worth considering.
This would open more doors for the companies offering the benefit as well, providing them with a larger influx of potential employees to choose from and a wider field of competition in the realm of recent graduates and potential employees.
A wider selection pool allows a little more room for an employer to be picky, as well. Another added bonus for employers: the incentive of the benefits package and the competition that would arise in the interview process would likely result in an increase in productivity and hard work within the company. Basically, it’s a win-win.
So What’s the Catch?
Right now, it’s only Davis’ district that would benefit from such a plan, his district being an 8 university and 5 community college block in Illinois. However, there is another bill in place called the Employer Education Assistance Program, which allows an employer to contribute pre-tax earnings towards funding continued education for their employees, but not for paying down previously accrued student loans.
This means those who are working and attending school have some funding available to them, but not those who have graduated with debt.
The Employer Participation in Student Loan Assistance Act
With such inventive plans being devised, and the upcoming deal with Gradifi and PriceWaterhouseCoopers, it’s looking hopeful that more and more student debt solution plans will continue to pop up, providing options within the workforce for paying down student loans.
Let’s hope that people keep ’em coming!