Today’s college graduates are starting their careers with an average of almost $40,000 in student debt. That data point surely shapes students’ and families' decisions on where to go to college, what to study and whether higher education is even worth it.
That’s bad news for employers, who have never had to work harder to close workforce skills gaps. With unemployment at its lowest point in almost 50 years, the hunt to attract and keep talent has never been more intense. Meanwhile, 44 million Americans—most of them employed or seeking employment—collectively carry more than $1.5 trillion in student loan debt. That represents a real crisis for our country and our economy.
Employers want to help their current and prospective employees by offering a benefit to help pay back student debt in the same way they offer tuition reimbursement benefits for current students. But student loan repayment benefits are costly for both sides. Unlike tuition assistance, employers can’t claim a tax deduction for these payments, and recipients also must treat it as taxable income.
In today’s competitive labor market, a leading-edge benefits package is the most powerful tool employers can wield to attract and retain top talent. It’s time for tax-free solution employers can use to appeal to skilled, educated workers who want to break free from student debt.
In keeping with SHRM’s advocacy to create better workplaces and a better world, we support the federal expansion of Section 127 of the Internal Revenue Code to enable employers to use pretax dollars to pay for student loan assistance just as they do for tuition reimbursement.
This is our chance. Congress is expected to take up year-end, must-pass legislative proposals, which could include legislation to expand Section 127.
Here is what you can do to bolster support for the expansion of education assistance: Call, email or Tweet your lawmakers to urge them to include H.R. 795 and S.796 in a year-end package.
Not only can expanding employer education assistance address the skills gap, it is a good investment in America’s workforce. In a future where most employers are able to help their workers defray student debt, more individuals will have the confidence to pursue or complete higher education and be prepared to fill high-demand fields in the years and decades to come.
And there’s another bright spot: Millennials, who by 2025 will make up 75 percent of the workforce, currently struggle to buy homes, save for retirement and pay for health care. Increasing and expanding Section 127 will help alleviate their financial burdens and encourage savings so they can become more robust contributors to our economy.
Let’s fight the skills gap and create a better world for the people we serve by advocating for employer-provided education assistance in all its life-changing forms.