Two Bills That Can Change Student Loans Benefits
There is some bipartisan legislation currently pending in Congress. These bills are the Student Loan Repayment Assistance Act and the Employer Participation in Student Loan Assistance Act. If the legislation passes it would allow employers to assist employees with their student loan repayments through a benefit that would be tax-exempt.
This year in President Obama’s State of the Union Address he stated we needed to tackle student debt. That higher education should be and needs to be made more affordable for all Americans. Obama stated that most graduates are held back from their potential by starting their adult lives while “stuck in the red.” Obama and student loan borrowers should be happy to know that we are chipping away at the problem.
There is some bipartisan legislation currently pending in Congress. These bills are the Student Loan Repayment Assistance Act and the Employer Participation in Student Loan Assistance Act. If the legislation passes it would allow employers to assist employees with their student loan repayments through a benefit that would be tax-exempt. As of now, student loan reimbursements are taxed, and these bills would offer new incentives for companies to help their staff pay off student loans at a faster pace.
For example, a 401(k) contribution from an employer is tax deductible for the employer. That contribution is also tax-deferred for the employee. This means that the employee doesn’t pay taxes on that amount until they take it out for retirement. Currently, neither is the case for student loan benefits. It isn’t a tax deductible for the employer, nor is it tax deferred for the employee.
With a lot of companies currently making contributions out of pocket, student loan benefits don’t make much sense in the current climate. However, it is becoming an increasingly bigger bargaining chip for the well-educated, highly qualified, and young workforce. However, if this bill passes companies will be able to pay $5,250 per year to include contributions to their employee’s student loan payment.
This bill is in its infancy still and who knows how the election will impact the bill. Washington moves slow and some companies will need an answer now. Ameritech Financial, an industry leader in student loan benefits, is working with companies to reduce their employee’s monthly payments. For a lot of student loan borrowers out there this might be the better plan. Ameritech Financial works with your loans and programs in place to lower monthly payments and set their clients on track for student loan forgiveness.
The $5,250 cap set in place by these bills might not be enough – only $437.50 per month – some student loan borrowers can be as high as a couple thousand depending on loan amounts. Ameritech Financial doesn’t set a ceiling for the benefits you can receive. They work with individuals as well as businesses and treat every situation with the individual care it needs because no two situations are alike.
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