Staten Island Reporter

Today, Congresswoman Nicole Malliotakis (NY-11), Rep. Scott Peters (CA-50), and U.S. Senators John Thune (R-SD) and Mark Warner (D-VA) introduced the Employer Participation in Repayment Act, bipartisan and bicameral legislation aimed at continuing tax-free reimbursement for higher education expenses.

Currently, Section 127 allows employers to provide up to $5,250 in tax-free reimbursement for repaying student loans, paying tuition, and purchasing required books, supplies, and equipment. This provision was initially included in the March 2020 CARES Act but is set to expire at the end of 2025.

"Over the past 20 years, the cost to attend college has risen 45 percent," said Congresswoman Malliotakis. "Our bipartisan legislation will allow millions of students and recent graduates to continue receiving reimbursement through their employer up to $5,250 per year tax-free."

Rep. Scott Peters emphasized the program's success over the last four years: “This public-private collaboration has proven itself as a cost-effective solution to the student debt crisis.”

Senator Thune highlighted that incentivizing employers was a common-sense step taken by Congress: “The Warner-Thune bill would permanently equip employers with this unique tool to help attract and retain talented employees.”

Senator Warner noted that too many young Americans are struggling under student debt: “My Employer Participation in Repayment Act took an important step to help folks pay down their debt while also giving employers a powerful tool to recruit and retain the best talent.”

Andy Brantley from CUPA-HR stated that both employers and workers have benefited from Section 127 benefits during COVID-era laws: "CUPA-HR fully supports this bill to ensure modern Section 127 benefits are made permanent."

The American Council on Education expressed strong support for making these benefits permanent: "This expansion of Sec. 127 potentially also could generate substantial private sector funds for student loan repayment."

Scott Thompson, CEO of Tuition.io, emphasized that extending these benefits is crucial for today's workforce: "We at Tuition.io strongly support making these benefits under Section 127 permanent."

The bill text is available online.

BACKGROUND:

Qualified Educational Assistance (Section 127) allows an employer to exclude up to $5,250 paid or incurred on behalf of an employee from wages if certain requirements are met. The education may be at undergraduate or graduate level and does not need to be job-related.

The following requirements apply:

- The employer must have a written plan.

- The plan may not offer other benefits instead of education.

- Assistance does not exceed $5,250 per calendar year.

- The plan must not discriminate in favor of highly compensated employees.

- Educational expenses include tuition, books, supplies necessary for class but do not include tools or supplies kept after course completion or non-job-related sports/hobbies.

To learn more about Qualified Educational Assistance under IRC Section 127 click here.

The bill is endorsed by various organizations including the National Education Association, National Association of Realtors, NAICU among others.