Make student debt help a job benefit, NJ accountants say
Student loan debt has climbed to the most worrisome level in history, accountants say, with not only Millennials shouldering such high debt levels, but their parents and grandparents as well.
The New Jersey Society of Certified Public Accountants has announced it is supporting the expansion of employer-provided student loan repayment benefits to help reduce this debt.
NJCPA Chief Marketing Officer Donald Meyer said New Jersey has the sixth highest student loan debt in the country, so the state CPAs are throwing their support behind the Employer Participation in Repayment Act. He said it would make a company's contribution to employee-student debt tax advantage, similar to the way a 401(k) retirement contribution is a tax advantage for companies.
As it stands now, the government taxes any student loan contribution as ordinary income for the employee and requires companies to pay the payroll tax on the benefit amount. Because the benefit is not a tax advantage, it makes it difficult for the employer to offer it as a benefit. So Meyer said what the NJCPA wants to encourage is for companies to offer this type of repayment plan for the tens of thousands of borrowers across the country who are struggling with repaying their student loan debt. Not only would this benefit the employee, but the employer as well.
If enacted, the Employer Participation in Repayment Act of 2019 would allow a tax exclusion for employers to provide student loan repayment up to $5,250 per year per employee.
The national average student debt is $33,000.
Parents and grandparents who help out with these payments are also affected. Many Baby Boomers and Gen-Xers have as much debt as Millennials.
Meyer said many of these older generations are afraid they will never be able to pay off the student loan debt.
In a recent survey, 75% of NJCPA respondents said student loan debt is a huge problem in New Jersey because even without student loan debt, the Garden State is an expensive state. Meyer said that an extra $500 or $600 monthly student loan repayment can make it difficult for Millennials to buy a house or a car, invest in retirement, start a family or a small business.
The NJCPA created a Student Loan Debt Task Force a year ago to help educate people on reducing debt. The task force focuses on legislation that will be beneficial to borrowers and educating the members who have debt on ways that they can improve their situation. But they also want to educate the members on ways they can help the public.
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