- The Society for Human Resource Management (SHRM) has renewed its call for an expansion of Section 127 of the Internal Revenue Code, which would allow employers to use pretax dollars to pay for student loan assistance.
- According to SHRM, pending legislation, H.R. 795 and S.796, could do just that. The organization has called on stakeholders to ask lawmakers to consider these bills.
- The average college graduate enters the workforce with $40,000 in student loans, SHRM said, which has motivated it to support a tax-free program for employers to help ease graduates' finances. SHRM pointed out that Millennials, who will make up 75% of the workforce by 2025, struggle to buy homes, pay for healthcare and save for retirement due to student debt.
Few employers offer workers student-loan assistance, which makes passing an expansion to Section 127 a forwarding-thinking move that could help free workers from debt and make employers' benefits packages all the more alluring.
Research shows that employees would welcome such a move: More than 75% of respondents in a CommonBond survey released in May said they want their employer to offer a repayment benefit. The financial technology firm also found that student debt negatively impacts workers' overall wellbeing, performance and retention rates.
Without such an expansion, however, some are finding innovative ways to meet employees' call for help. The IRS made public a private letter ruling in August that approved an unnamed employer's plan to amend its 401(k) plan to contribute to the retirement accounts of employees making payments on their student loans.