Policies in the Making: A Current Overview of Student Loan-Related Bills 🏛📜  

Hello there, I’m Adria and in this blog post and posts to come, I’ll aim to keep you abreast of upcoming legislation and policies that could affect your student loans.

So here we go… Two startling loan-related observations: 1.) In the near future the problem of ineffective student loan systems will change, but not entirely for the better (sorry). 2.) That being said, policies meant to aid people in paying off student loans are forthcoming and, in many cases, promisingly positive (hooray).

Come spring, we can expect to see a finalized version of the Promoting Real Opportunity, Success and Prosperity through Education Reform Act—known as the PROSPER Act—that will change almost every aspect of current systems for student loans. There are, at present, 590 pages of content (a lot to read through between now and spring!), making so many amendments and additions to the Higher Education Act of 1965 that, while some details look promising, the overwhelming sense is one of worry. The Congressional Budget Office has looked over the bill and, as a recent article in The Washington Post elegantly outlines, the bill would most likely reduce funding for student loan programs by $14.6 billion over the next ten years. In subsequent posts I will be sure to keep you updated on how this act might affect you.

With such an overhaul in progress, the need for more creative approaches to pay off student loans is heightened. Thankfully, as mentioned earlier, such approaches are being broached in the world of policy. The National Association of Student Financial Aid Administrators has a comprehensive list of student loan-related bills waiting to be approved; I will be offering summaries for the ones that have over two co-sponsors, and I’ll save the details and implications of these policies for future blog posts.

On July 28th of 2017, the Pell Grant Flexibility Act (HR 3581) was introduced, opting to remove Pell Grant awards from a person’s gross income. Also introduced on July 28th was the Student Loan Interest Tax Deduction Expansion Act (HR 3573). This bill targets the limitation on student loan interest deductions, increasing the limit from $2,500 to $7,500.

The Student Opportunity Act (HR 3346) aims to exclude from gross income taxes the money received from loan forgiveness and discharge. The Save for Success Act (HR 2378) addresses student loans from a future-oriented, family-participation stance, establishing a system where a family can receive $250 a year in the American Opportunity Tax Credit for money put into a qualified college savings plan. Again aiming to help the family help the students, the HELP for Students and Parents Act (HR 1656) allows employers to contribute up to $5,250 tax-free per year to their employees to use for either payments on student loans or to invest in a qualified 529 college savings plan.

The policy with the most co-sponsors at the moment is (prepare yourself for another long title) the Employer Participation in Student Loan Assistance/Repayment Act (HR 795). The simple and hopefully effective goal of this bill is to let employers offer a pre-tax benefit for paying off student loans. This would be a straightforward, mutually useful benefit for employers and employees, as it would allow you to take money from your paycheck before tax and make payments on your student debt tax-free. It is a policy that has potential to reach every employee with student debt and has an encouragingly large pool of co-sponsors. I am excited about this bill and will be reporting on it as it makes its way through the legislative process.

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