U.S. Senators Mark R. Warner (D-Virginia) and John Thune (R-South Dakota) today introduced the bipartisan Employer Participation in Refinancing Act to help individuals pay down their student loans. The Warner-Thune legislation would provide a new tool to help employers recruit and retain quality employees by allowing them to help qualified employees repay student loans with pre-tax dollars. To be eligible for this loan assistance benefit, employees with student loan debt must refinance their loans into the private market, which will allow the student to take advantage of lower interest rates available than what is currently offered by the federal government.
Currently, the Employer Education Assistance Program allows employers to contribute pre-tax earnings to help employees finance continued education, but does not allow relief for individuals who already have incurred student loan debt in the course of their undergraduate or graduate careers.
“Student debt threatens the long-term financial security of too many young Virginians,” Senator Warner said. “This bipartisan legislation allows employers to assist their employees in managing and paying down their student debts. Additionally, it provides a unique new tool to help Virginia companies attract and keep talented employees. This is a win-win.”
“Students should have a choice when it comes to financing their education,” said Thune. “Rather than locking students into high-interest loans with the federal government, our bill would allow students flexibility to work with private companies to secure lower rates and pay part of these loans back using pre-tax dollars. This is a winning solution for students and businesses alike. I hope our colleagues will join us in moving this important legislation forward.”As a result of the Affordable Care Act, the federal government completely absorbed the student loan industry and now charges students as much as 6.41 percent to obtain money to pay for tuition. As a result of these high interest rates, graduates are left with little resources to purchase a new home, new car, or open a small business. By encouraging individuals with student loan debt to return to the private market where interest rates may be lower for qualified borrowers, this bill would allow graduates to keep more money in their pocket instead of sending it to the federal government in the form of high interest rates. It would also give employers an additional recruitment and retention tool to help find and retain high-quality employees.