Tax-Free Contributions for Student Loan Debt
Ameritech Financial is closely following legislation introduced by Senator Cory Gardner, R-Col., that would allow companies and their employees to make up to $10,000 per year in tax-free contributions to their workers’ student loan debt. With more than 44 million Americans owing over $1.5 trillion in student loan debt, Gardner sees the legislation not as a way to end the student loan crisis, but as a first step that will spur job growth and retirement savings. Millions of Americans faced with flat income growth struggle every day to keep up with rising housing costs and soaring student loan debt. Ameritech Financial, a document preparation company, assists borrowers who are overwhelmed by their student loan debt to apply for or maintain enrollment in federal programs, such as income-driven repayment plans (IDRs) that can possibly lower monthly payments.
“We are watching this and other legislation seeking to provide relief for the millions of Americans struggling with student loan debt,” said Tom Knickerbocker, executive vice president of Ameritech Financial. “For those overburdened now, we can guide you through the sometimes complicated process of finding out which programs you may qualify for, help you decide which one may work best for you and then make sure all the i’s are dotted and t’s crossed, so you can feel assured that you are getting all the benefits you are eligible for.”
The legislation is inspired by the ways in which employees are allowed to make tax-free savings through their employers’ 401(k) retirement savings plans. As with other 401(k) plans, companies can, but are not forced to, match employee contributions. Paying down student loan debt is incredibly important, Gardner says, because many Americans aren’t able to save for retirement due to the heavy financial obligations of their student loan debt. The idea is to allow Americans to more quickly pay down their student loan debt so that they can begin saving for their retirement sooner.
Like many of his legislative peers, Gardner, who graduated from the University of Colorado Law School in 2001, still has nearly $50,000 in student loan debt. Though the tax-free savings from the proposed legislation would funnel money away from the federal government, Gardner hopes that economic growth spurred by the measure will make up for lost tax revenue. The program incentivizes employers to attract better, more motivated employees, producing higher earnings for companies. It also counterbalances legitimate student loan debt concerns and reaffirms higher education as a viable path for Americans who want to build a better future for themselves.
“Like so many of these legislative fixes, it is important to make sure that we see both the larger picture of the student loan crisis and the individual efforts of borrowers to keep up with their student loan debt,” said Knickerbocker. “If you are struggling, we can possibly help you lower your monthly payment based on income and family size, perhaps even ending in forgiveness after 20 or 25 years.”
