March 2 (UPI) -- Legislation backed by Republicans and Democrats would encourage employers to help pay off their workers' students loans through federal tax breaks.
The bill amends the Internal Revenue Code to give tax breaks up to $5,250 yearly to workers to pay down their student loans, meaning the subsidy is not counted as income. Also, employers can deduct the employee subsidy.
This is much like the 401(k) in which contributions to employees' retirement funds aren't taxable.
Last month, U.S. Rep. Rodney Davis, a Republican from Illinois, introduced the bill along with Rep. Scott Peters, a Democrat from California. They have the support of 29 colleagues.
"Access to affordable higher education has made the American dream attainable for millions of Americans, and is central to our nation's competitiveness and success," Peters said Thursday in a statement. "I would not have been able to attend college without student loans and work study programs, but the rising burden of student loan debt has weighed down graduates and is a drag on our entire economy."
In 2015, Davis and Peter introduced the same bill but it didn't pass.
But they have expanded support from other legislators.
"Adding tax relief to the equation could elevate student loan assistance alongside 401(k) contribution as one of the most valuable financial benefits a company can offer its workers that directly impact their quality of life today," Scott Thompson, the CEO of Tuition IO, a company that helps employers set up loan payment assistance, told CNN.
Opponents of the legislation say it only benefits high-wage earners.
"[The bill] delivers public subsidies in an arbitrary and potentially unfair manner and would encourage employers to do the same," Matthew Chingos, senior fellow at the Urban Institute, told The Washington Post. "The largest benefits go to individuals with the most student debt, who are least likely to default on their loans. A worker with $10,000 in debt could only use the benefit for two years, whereas a worker with $100,000 in debt could use it for 20 years."
Four percent of companies offer loan repayment assistance, according to the Society for Human Resource Management.
The following companies already help workers pay off their loans: PricewaterhouseCoopers, Fidelity, Prudential, Staples, Aetna, Live Nation and Natixis Global Asset Management.
The average student loan debt is $30,100, according to a 2016 report from The Institute of College Access and Success which