WASHINGTON, D.C. – Today, Representative Steve Stivers (R-OH) and Representative Terri Sewell (D-AL) introduced the Student Loan Debt Relief Act, a bill which will help employer student loan repayment programs attract more graduates and help borrowers pay fewer taxes on their education. This legislation will allow employer student loan repayment programs to be considered a non-taxable fringe benefit, raising the cap on tax free educational assistance to $10,000. Additionally, it doubles the maximum deduction of student loan interest from $2,500 to $5,000 and allows more young professionals to benefit from these programs.
 
“Students and recent graduates often face difficult financial hardship paying for their student loans with entry level jobs. There is no doubt that student loan debt can be a major obstacle in building a solid financial future,” Stivers said. “While this is just one step to addressing the cost of higher education, I am proud to support a stronger student loan repayment program to relieve the burden on the next generation.”
 
“We cannot allow student loan debt to keep the American dream out of reach for our youngest generation,” said Rep. Sewell. “Recent graduates joining the workforce face many challenges, and student debt can be one of the most difficult. The Student Loan Debt Relief Act takes an important step forward by giving young people a better opportunity to work towards financial security.”
 
Current law allows employers to provide student loan assistance and repayment benefits for their employees, and employers are then able to write off those costs as part of doing business. However, the IRS classifies these programs as taxable income on the employees who are then taxed on that benefit as additional income. This bill just eliminates the classification to allow employees to receive this benefit without the burden of additional taxes on their paychecks, allowing them to save more of their hard-earned pay.
 
Borrowers are also currently allowed to deduct their interest payments made on their student loans up to $2,500 each year when they file their taxes.  Many graduates spend years paying off their interest, through a myriad of repayment plans which help lower monthly payments, but can extend the life of repayment and ultimately their total balance. This legislation seeks to double the amount of interest that borrowers can deduct when filing their taxes to a maximum of $5,000 each year, helping students save more of their money to help start their lives and pay off their loans sooner.
 
Additionally, current law limits who can benefit from this deduction by setting an income ceiling of $80,000 for an individual filers and $160,000 for couples filing jointly to be eligible for interest deduction. This bill will raise these amounts to $150,000 and $250,000, respectively, to allow young professionals, doctors, lawyers and high tech industry workers – who often have the largest loan amounts despite a higher income – to qualify for this deduction.
 
According to the U.S. Department of Education, the average Class of 2016 graduate has $37,172 in student loan debt, up six percent from last year. 
 
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