Student Loan Update: Republicans Back Plan To Help Borrowers

A pair of Republican lawmakers have signed on as sponsors for a plan to h0elp student loan borrowers pay off their debt.

This week, a group of lawmakers introduced the Employer Participation in Repayment Act, which would extend permanently a program for students and college graduates to keep getting tax-free reimbursement for higher education costs.

The proposal’s sponsors include New York Republican Representative Nicole Malliotakis, California Democratic Representative Scott Peters, Republican South Dakota Senator John Thune and Democratic Virginia Senator Mark Warner.

“Over the past 20 years, the cost to attend college has risen 45%, forcing students to choose between pursuing higher education and taking on tens of thousands of dollars in burdensome student loan debt,” Malliotakis said in a statement. “Our bipartisan legislation will allow millions of students and recent graduates to continue receiving reimbursement through their employer.”

A program that allows employers to offer $5,250 in tax-free reimbursements for student loans as well as other costs like tuition, textbooks and equipment would become permanent under the proposal. Currently, that program is scheduled to expire at the end of 2025.

“This tax incentive will continue to strengthen our workforce, increase our nation’s competitiveness, and provide much-needed economic relief to millions of Americans who are struggling to make ends meet during this time of record-high inflation,” Malliotakis said.

Across the country, Americans owe $1.7 trillion in student debt, and employer-sponsored debt relief is a key way to clear the debt load without putting it on American taxpayers.

“Incentivizing employers to help repay their employees’ student loans was a common-sense step Congress took to address the high levels of student debt that borrowers face,” Thune said in a statement. “The Warner-Thune bill would permanently equip employers with this unique tool to help attract and retain talented employees while protecting American taxpayers from costly burdens. This is a win-win for graduates and their employers, and I hope it will once again garner strong, bipartisan support.”

Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, said the bill differs from many other student loan initiatives due to its popularity across party lines.

“There’s a reason why this bill is one of the few attached to student debt relief that has bipartisan support,” Beene told Newsweek. “Instead of forgiving debt outright, it allows employers a way to attract new talent by the promise of paying back some of their student debt, while also keeping that key source of revenue coming into the government and other student loan lenders.”

While a number of Republican lawmakers have become weary of anything student debt related since President Joe Biden unveiled his massive student debt forgiveness plan, Beene still thinks this proposal has a pretty good chance of getting approved.

“I can see no reason why this wouldn’t pass unless we’ve entered an age where anything with the faint mention of student loan forgiveness is shot down by some legislators,” Beene said. “Even then, I can’t imagine that number being significant enough to affect its passing. This bill benefits employers, employees and the government. There’s few downsides to something that checks all those boxes.”