Include Student Loan Repayment Benefit in Phase 2 Bill, Groups Say

August 27, 2018

The Hon. Kevin Brady
Chairman
House Committee on Ways and Means
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Washington, DC 20515

The Hon. Richard Neal
Ranking Member
House Committee on Ways and Means
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Washington, DC 20515

Dear Chairman Brady and Ranking Member Neal,

On behalf of the undersigned organizations and companies, we write in support of H.R. 795, the Employer Participation in Student Loan Assistance Act. As Congress considers Tax Reform 2.0, we urge inclusion of H.R. 795. This legislation expands Section 127 of the Internal Revenue Code (IRC) to cover student loan repayment — an expansion which provides a valuable benefit to employees, employers, and the economy.

Financing a college education is expensive, but loans, grants and tax benefits help make college more affordable. Student debt can delay an individual's major life decisions and the nation suffers when this debt burden, in turn, hinders innovation. While the tax code has several incentives to help students and families afford tuition, there are few benefits that help students repay loans. When employees receive assistance to pay off their student loans, they have increased opportunities to buy a home, save for retirement, or start a new business. In turn, these contributions aid the overall health and growth of the U.S. economy.

It's important to note that multiple studies on the drivers of college tuition pricing fail to find any correlation with federal assistance — whether it be student aid or tax benefits. Sec. 127 simply allows employers to offer financial assistance to employees to pursue their education, with no proven negative effects on tuition or the economy in general. In fact, just the opposite is true — the benefit adds skilled workers to the economy and when employers help with tuition assistance, it allows colleges to provide more aid to students.

Improving Sec. 127 by enacting H.R. 795 would further contribute to the overall health and growth of the U.S. economy, by making it easier for employees to pay off student loans thereby allowing them to invest in other opportunities. The legislation will boost the goals of tax reform and Tax 2.0 by boosting growth, putting more money back in the pockets of middle class families helping them to save more, and it will spur new business innovation. At a time when the economy is growing, unemployment is low, and business is looking to attract and retain labor, encouraging employers to offer student loan repayment by making it a Section 127 benefit will have a tremendous impact for both employers and employees.

Section 127 of the IRC is a popular benefit that enjoys bipartisan support and enables employers to voluntarily provide education assistance to their employees. Under Section 127, employees are able to exclude from income up to $5,250 per year in tuition assistance for any type of educational course at the undergraduate, graduate or certificate level.

This same benefit should be expanded to employees who have already received their education and incurred student loan debt in the process. Congressmen Rodney Davis of Illinois and Scott Peters of California introduced H.R. 795, the Employer Participation in Student Loan Assistance Act, to accomplish this goal. H.R. 795 would provide employers with the flexibility to offer employees assistance towards their student loans. By expanding Section 127 to include student loan repayment, employees could receive a tax-exempt benefit from their employer of up to $5,250 per year to pay towards their student loan debt.

This benefit is an important tool for employers to attract and retain top talent in order to build a skilled workforce. Section 127 plays a critical role in maintaining U.S. competitiveness and could, if strengthened, become the premier employee benefit for tuition assistance and loan repayments among employers.

With 126 cosponsors, broad bipartisan support, and a bipartisan companion bill in the Senate led by Senators Warner and Thune on the Finance Committee, we urge Congress to include H.R. 795 in Tax Reform 2.0. Thank you for your consideration and assistance in strengthening this critical tax benefit.

Sincerely,

American Association of College Registrars
American Association of Community Colleges
American Association of State Colleges and Universities
American Association of University Professors
American Council on Education
American Federation of State, County and Municipal Employees
American Federation of Teachers
American Society for Engineering Education
American Student Assistance
Associated General Contractors of America
Association for Talent Development
Association of American Universities
Association of Big Ten Students:

Association of Community College Trustees
Association of Jesuit Colleges and Universities
Big Stone Therapies
Boston University Student Government Association
Bright Horizons Family Solutions
ChowNow
College & University Professional Association for Human Resources
CommonBond
Commonwealth Psychology Associates
Corporate Voices for Working Families
Corporate Wellness, Inc.
Council for Adult and Experiential Learning
Council of Graduate Schools
Credit Union National Association
Digital Federal Credit Union
Dots, Inc.
Duke University
Employers Council on Flexible Compensation
First Republic Bank
GDH Consulting
Gradifi
Graduate Student Association (GSA)
Guidance Residential, LLC
Hartford Consortium for Higher Education
Hewlett-Packard
Information Technology Industry Council
Institute of Electric and Electronics Engineers
International Public Management Association for Human Resources
MetroHartford Alliance
Motus, LLC
National Association of Colleges and Universities Business Officers
National Association of Graduate Professional Students
National Association of Independent Colleges and Universities
National Association of Independent Schools
National Council for Advanced Manufacturing
National Education Association
National Public Employer Labor Relations Association
National Tooling and Machining Association
Natixis Global Asset Management
New York University
North American Die Casting Association
Peanut Butter Inc.
Precision Machined Products Association
Raytheon
Rochester Institute of Technology
Small Business Advocacy Council
Society for Human Resource Management
Starbucks
Student Advocates for Graduate Education (SAGE)
Summit Credit Union
The Precision Metalforming Association
The World Council of Credit Unions
Training Solutions, Inc.
Tuition.io
United Auto Workers
United Technologies Corporation
University Continuing Education Association
University of Northern Iowa Student Government
University of Pennsylvania
Verizon
Ward and Smith, P.A.
WC Research, Inc.
Whitworth University
Zmarketeers, Inc