H.R.1801 - Employer Participation in Repayment Act (119th Congress)
Summary
H.R.1801, the Employer Participation in Repayment Act, aims to amend the Internal Revenue Code of 1986 to make permanent the exclusion for certain employer payments of student loans under educational assistance programs. Currently, this exclusion is set to expire on January 1, 2026. The bill proposes to remove the expiration date, making the exclusion permanent.
The bill was introduced in the House of Representatives on March 3, 2025, by Ms. Malliotakis and Mr. Peters, and was referred to the Committee on Ways and Means. The proposed change would apply to payments made after the date of the bill's enactment.
Expected Effects
If enacted, H.R.1801 would allow employers to continue providing tax-free student loan repayment assistance to their employees indefinitely. This could incentivize more employers to offer such benefits, potentially attracting and retaining talent.
Employees receiving this benefit would not have to include the employer's student loan payments as part of their taxable income. This would effectively reduce their tax burden and free up more of their income.
Potential Benefits
- Attract and Retain Talent: Companies offering student loan repayment assistance may become more attractive to prospective employees, especially those burdened with student debt.
- Reduced Financial Stress: Employees receiving student loan repayment assistance may experience reduced financial stress, leading to increased job satisfaction and productivity.
- Increased Workforce Participation: By alleviating student debt burdens, the bill could encourage more individuals to enter or remain in the workforce.
- Simplified Tax Planning: Making the exclusion permanent removes uncertainty for both employers and employees, simplifying tax planning.
- Potential Economic Stimulus: Increased disposable income for employees could lead to greater consumer spending, stimulating economic activity.
Potential Disadvantages
- Potential for Increased National Debt: Excluding employer payments from taxation could reduce government revenue, potentially increasing the national debt.
- Fairness Concerns: Tax benefits for student loan repayment may disproportionately benefit higher-income individuals who are more likely to have student debt and work for companies offering such benefits.
- Complexity in Administration: Ensuring compliance with the rules and regulations surrounding educational assistance programs can be complex for employers.
- Limited Scope: The bill only addresses student loan repayment assistance provided by employers, leaving out individuals who are self-employed or work for companies that do not offer this benefit.
- Potential for Inflation in Tuition Costs: If employers are helping to pay off student loans, this could incentivize universities to increase tuition costs, knowing that students will have more help paying for it.
Most Disadvantaged Areas:
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution (Preamble), as it aims to improve the financial well-being of individuals burdened with student loan debt. Article I, Section 8 grants Congress the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States.
However, the Constitution does not explicitly address student loan repayment or educational assistance programs. The power to regulate such matters is generally understood to fall under the implied powers of Congress, necessary and proper for carrying into execution the enumerated powers.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).