Photographed by Raven Ishak.Getting your boss to pay off your student loan debt probably sounds like a dream, but if Congress has its way, that dream could become a reality.
According to Bloomberg, two bills making their way through Congress are looking to expand a section of the tax code that would give companies a tax incentive to help employees pay back their student loans.
While some companies are starting to offer money towards student loan debt as part of their standard benefits package, alongside health insurance and 401(k) contributions, many are choosing not to, because it isn't financially worth it for them.
See, money that is being used for loan payoff — unlike the money that goes into a 401(k) — is considered taxable income, which means both the employer and the employee have to pay taxes on the amount given. But under this new policy, up to $5,250 per year in employer contributions toward student debt would be nontaxable income.
The hope is that by enacting this small change, companies will make big strides in helping their employees pay off their student loans. Bloomberg even reports that a change could help these benefits "go from a niche offering to one that's more common than parental leave." Right now, just 12% of American private-sector workers have access to paid family leave at all, so it may not be that difficult.
Last year, the Wall Street Journal reported that the class of 2015 is the most indebted ever, with the average graduate saddled with $35,000 in loans. Such large amounts of debt lead young workers to hold off saving for retirement to pay back their loans, but this law could help young workers save for retirement while still making loan payments.
Bloomberg found that "just a couple of hundred dollars a month can save debt holders thousands of dollars in interest." Now, just imagine if employers hit that $5,250 mark.
Unfortunately, for the near future, we may have to do just that: imagine. Backers of the bill said they were "cautiously optimistic" that it would pass, but didn't expect it to do so during an election year. But the bill currently does have bipartisan support — and that's something you certainly don't see every day.
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