Represent! SoFi Supports #DebtFreeTaxFree
In our efforts to bring you the latest updates on things that might impact your financial life, we may occasionally enter the political fray, covering candidates, bills, laws and more.
Please note: SoFi does not endorse or take official positions on any candidates and the bills they may be sponsoring or proposing. We may occasionally support legislation that we believe would be beneficial to our members, and will make sure to call it out when we do. Our reporting otherwise is for informational purposes only, and shouldn’t be construed as an endorsement.
On September 25, 2019, SoFi’s general counsel, Rob Lavet, went to Washington D.C. as part of the DebtFreeTaxFree Coalition in support of the House of Representatives bill, H.R. 1043/Senate’s bill, S. 460. DebtFreeTaxFree is a consumer advocacy coalition aimed at supporting bills that will provide tax benefits for employers who help their employees pay down student loan debt.
Here’s some information on the bill this campaign supports and more about the DebtFreeTaxFree Coalition.
H.R. 1043: Employer Participation in Repayment Act of 2019
H.R. 1043 is currently in the House Committee on Ways and Means and would expand upon the tax exclusion provision that’s currently available when employers provide educational assistance to employees. According to section 127 of the Internal Revenue Service code, employers can provide $5,250 annually to each employee, tax-free, in tuition assistance.
If H.R. 1043 becomes enacted into law, this tax benefit would also apply if an employer provides payments on qualified education loans of employees, whether the employer gives those payments to the employee or the lender.
House: H.R. 1043 was introduced on February 7, 2019 by Rep. Scott H. Peters [D-CA-52].
S. 460: Employer Participation in Repayment Act of 2019
This companion bill would expand employee tax exclusions in a manner that’s similar to House Bill 1043. Senate Bill 460 was introduced on February 12, 2019 by Sen. Mark R. Warner [D-VA]. It has been read twice and then referred to the Committee on Finance.
Organizations and people who support the DebtFreeTaxFree Coalition favor the passage of this bill, which would give employers the ability to pay down employees’ student loan debt without greater taxes being incurred by either party—employer or employee.
This coalition has nearly 20 organizations supporting its efforts, with increasing numbers of signatures collected to date, thanks to a coalition of support, including from SoFi. According to DebtFreeTaxFree, 95% of human resource executives want to help relieve their employees’ financial burdens and help improve their overall financial wellness; but, because employer contributions towards employees’ student loans are taxed for both parties as income, this is a complex situation for companies to address. Many employers are therefore reluctant to move forward without the legislative changes that would provide tax exclusions.
Meanwhile, it can be a real catch-22 to be an employee today, when nearly a third of employers have increased their educational requirements over the past five years, according to DebtFreeTaxFree. While it makes good sense for employers to want an educated workforce, for the 72% of today’s workforce that has taken out student loans, paying for this education can be challenging.
More Updates From SoFi in October
We’re proud to be part of the coalition that delivered employee stories about student loan burdens to key members of the U.S. House of Representatives and the U.S. Senate—and we look forward to providing you with an update on what recently happened in Washington D.C. In the meantime, if you’re interested in adding to your employees’ benefits package with financial wellness opportunities, please email us at [email protected].
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.