Massachusetts Lawmakers Offer Solutions to Tackle Student Debt by Providing Tax Relief for Employers that Help Repay Loans
Lawmakers in the Bay State have an outstanding solution to help Massachusetts residents repay their student debt. Massachusetts state lawmakers have introduced three bills to encourage companies to make student loan payments on behalf of their employees. If these bills are passed into law, Massachusetts will be the first state to offer tax advantages to employers that repay student loans. This article makes the case for state tax incentives for employer student debt repayment assistance and provides an overview of the legislation pending in Massachusetts.
Attracting Talent to the Bay State
Over 70% of graduates in the Class of 2016 took out student loans with an average of $35,000 per borrower. As these graduates enter the workforce, it is their number one financial concern, and over 90% of student loan borrowers would work for a company that offered student loan assistance. Lawmakers in Massachusetts believe that if they are the first state to offer employer student loan tax advantages, this strategy will give them a leg up on the competition from cross state rivals.
Currently student loan payments are treated as taxable income, just like compensation. And employers treat employee student loan payments as regular income. Changing this tax would allow employees to repay student loans faster. There are several federal bills that would change the tax treatment of employer student loan assistance but Massachusetts is the only state that has as many as three bills on the table.
Massachusetts Legislation Changes the Game for Bay State Companies
Thanks to Massachusetts Senator Eileen M. Donoghue, Representative Kate D. Campanale, and Representative Paul W. Mark, Massachusetts is out front in the chase to attract top talent to the Bay State by offering legislation to provide companies with the tools to offer student loan assistance benefit programs. All bills are pending further approval by their respective committees in the Massachusetts statehouse.
“An Act Encouraging Student Loan Repayment” (S. 1516)
Senator Donoghue’s bill would provide up to a $2,000 annual tax deduction to the company for each employee that receives student loan assistance from the company. The legislation would require that the employee is a resident of Massachusetts. There are 11 Senate cosponsors of S. 1516 and the bill has been referred to the Joint Committee on Revenue.
“An Act Promoting Student Loan Repayment” (H. 1480)
Assemblywoman Kate Campanale’s legislation provides a significant incentive to Massachusetts employers that help repay their employees student loans. The legislation would provide up to a $4,500 tax credit per year per employee for corporations that help repay their employees student loans. Currently over 40 state Reps have signed the petition to support Kate Campanale’s bill. H. 1480 was referred to the Joint Committee on Revenue.
“An Act Relative to Employer Student Loan Contribution” (H. 1579)
State Representative Paul W. Mark introduced H. 1579 in January to provide Massachusetts companies up to a $3,600 state tax deduction for each employee that receives student loan assistance. This legislation is supported by 18 state representatives and was also referred to the Joint Committee of Revenue.
Next Steps
Each of these bills has not been passed out of the Joint Revenue Committee; however, Massachusetts residents with student debt should reach out to the respective state representative to ask for its support. Finding your legislator is easy. Click on this link and enter your address to identify your Massachusetts state rep. The send them a note to support S. 1516, H. 1480, and H. 1579.
Massachusetts has already taken a leading role to figure out new solutions to help Bay State residents reduce their student loan debt. Acting on this legislation will enable Massachusetts companies to keep their most highly sought after students to take jobs in the Bay State. More importantly, legislation encouraging employers to help out will pay dividends to the Massachusetts economy because as borrowers get out of debt faster they will have more financial power to purchase their first home and start saving for the future.
About the Author
Chris Walters is the CEO of GradFin, a student loan repayment company that provides employer student loan benefit programs. Mr. Walters has over 15+ years of public policy experience. As a tax and financial services professional, Walters has served in many leadership positions on Capitol Hill, in the U.S. Treasury Department and for major trade associations. Chris graduated from Georgetown University with a BA in Government and the Johns Hopkins University with a MBA and MA in Government.