01/26/2017 | Press release | Distributed by Public on 01/27/2017 14:36
WASHINGTON, D.C., Jan. 26, 2017 - U.S. Rep. Dennis A. Ross (FL-15), Senior Deputy Majority Whip, made the following statement after reintroducing his Student Loan Repayment Act, which will allow employers to receive tax credits for hiring employees with student loans and for setting up an employee-employer match program for student loan repayments:
'After the Department of Education reluctantly admitted a coding error in its student loan repayment rates, it recently announced the new average three-year repayment rate has declined to 46 percent, 20 points lower than originally estimated. This means that fewer than half of undergraduate borrows are paying down their debt. The rest of the students have either defaulted, sought forbearance, or enrolled in income-based repayment plans, which are causing many borrowers who are only making minimum payments to owe more debt due to accrued interest. This is a serious problem we cannot continue to ignore.
'The legislation I introduced will help students pay back their student loans quicker, as well as provide tax incentives to employers who hire individuals with student loans and take part in the employee-employer repayment match program. Overall, this bill is designed to help students become gainfully employed and pay off their loans while employers are benefitted by hiring skilled and educated employees with a vested interest in long-term employment.
'As most college and higher-education students have started classes for the Spring semester, many of them have paid their tuition with students loans, without possibly considering how they are going to pay back the money they borrowed. We need to focus on helping these students repay their student loans, improve their credit, and contribute to society. Students are the foundation of our country's future, and we must ensure they have the ability to afford a college education and compete in an increasing global marketplace without being bogged down by crippling debt.'
Student Loan Repayment Act:
· Adds employees with student loans as a qualifying population to the Work Opportunity Tax Credit (see I.R.C. § 51):
o The employee must be an individual with an associate's degree or higher; and
o have at least $10,000 in student loan debt.
· Will allow for a $1,500-tax credit to employers to implement a repayment match program.
o This tax credit is available for each program enrollment by an employee.
o This credit is spread over three years ($500 per year).
o In order to receive this credit, employers must meet a minimum qualifying match contribution of $2,000 per year.
· Repayment match program contributions made by the employer are considered income to the employee.
o The employee will be required to pay standard income taxes on contributions paid by the employer.
o The employer will be allowed an I.R.C. § 162 deduction for qualified matching contributions.
o The first year a § 162 deduction may be taken by the employer is the taxable year the employer begins participating in the match program.
· This bill does not provide a bailout or exempt students from repaying their incurred student loan debt. Instead, it benefits employees by assisting in the payoff of their student loans and incentivizing them to retain employment.
· The repayment match program created by this bill is completely voluntary by the employer, and is used as an option to incentivize hiring, employee retention and student loan repayment.