Representatives Kathleen Rice (NY-04) and Steve Stivers (OH-16) introduced two bipartisan bills, the Students and Families Empowerment Act (H.R. 891), and the Decreasing Employees Burdensome Taxes from Student Loans Act (DEBT Act) (H.R. 902), which will help alleviate the burden of student loan debt for recent graduates and their families.
“Far too many of our nation’s college graduates are being crippled under the weight of their student loan debt,” said Rep. Kathleen Rice. “This crisis has gone on unchecked for far too long, burdening recent graduates and their families in New York and across the country. The two bills I am introducing with Representative Stivers will make it easier for student loan borrowers and their families to quickly pay off student loans. These are bipartisan, common-sense changes we can make to provide immediate financial relief to our college graduates.”
“For some students in Ohio’s 15th, pursuing their dreams means pursing higher education, but too often the cost is prohibitive, or it results in tens of thousands of dollars of debt,” said Rep. Steve Stivers. “I know how stressful the cost of higher education can be. One of the reasons I joined the Ohio Army National Guard was to help pay for my undergraduate degree at Ohio State. With help from these bills, students who are eager to create the next big thing, to innovate and advance our nation, won’t have to shy away from education due to the rising costs of attendance or the potential to be hamstrung by debt throughout their professional careers.”
The Students and Families Empowerment Act would amend the Internal Revenue Code to effectively remove the $2,500 cap on deductions for student loan interest. Borrowers would be able to deduct all of their interest for student loan amounts up to $750,000 – the same loan threshold as mortgage interest deductions. The bill would also eliminate the income limits on student loan interest deductions, allowing individuals earning more than $85,000 annually ($170,000 for couples filing jointly) to take these deductions on their taxes, and end the phase-out for individuals earning more than $70,000 ($140,000 for couples). Additionally, the bill would amend the Higher Education Act of 1965 to extend the grace period from six months to twelve months before recent graduates must begin to pay back their loans; this grace period also applies to parent borrowers, who are generally not afforded a grace period. Further, the bill would prohibit interest from accruing during this twelve-month grace period for most undergraduate, parent, and graduate student borrowers.
The DEBT Act would allow borrowers to keep more of their paycheck and pay off their debt sooner while making it easier for employers to provide student loan repayment assistance to their employees. The bill would expand the tax exclusion for employer-provided educational assistance programs to include an employer’s payment of any qualified education loan incurred by an employee, increase the maximum amount that may be excluded from the gross income of an employee under employer-provided educational assistance programs, and increase the maximum tax deduction and the income limitation for interest on education loans.