As more millennials enter the workforce, more attention is given to the issue of student loan debt. A majority of students graduate college or grad school, with student loan debt. Only a few manage to obtain jobs which pay enough to allow them to make student loan payments and actually live on their own. Some even say that student loan debt is the next real estate bubble in the economy. More companies recognize that in order to successfully recruit qualified candidates, they will have to offer some sort of assistance to the employee to help repay their student loans.
Last week, U.S. Reps. Rodney Davis (R-Ill.) and Scott Peters (D-Calif.) introduced new legislation amending Section 127 of the IRS Code which would allow employers to make payments of qualified education loans to either an employee, or a lender, on a tax free basis.
While many employers already offer tuition reimbursement for employees to continue their education, H.R. 795 would provide employees a tax-exempt benefit of up to $5,250 per year to pay on their already incurred student loan debt. While it is too soon to determine the possible success of this bill, it represents another signal in the shifting trend of desirable benefits for the newest crop of workers in the workforce.
Employers should take note when developing recruitment and retention strategies that offering a partial solution to employee student debt, like designating a portion of the employee’s compensation to repay those loans, might make the difference in whether that employee joins your organization, or looks further.