Today Senator Kennedy testified before the Joint Committee on Revenue in support of legislation he filed, S.1891 An Act encouraging employer student loan repayment. This bill seeks to provide relief to recent college graduates in Massachusetts from the financial burden of student loan debt.
S.1891 would offer a tax deduction of up to $2,000 per year to employers to match principal payments made towards student loan debt of an employee. Some companies have already introduced student loan repayment as an employee benefit to seek and retain talent. Employees are more likely to remain in jobs and more likely to perform at a high level if their employer pays a share of their student loans.
This legislation would alleviate the financial hesitation companies may have associated with initiating a repayment, while also enabling those working to pay off loans to contribute more our economy more fully.
His full testimony was as follows:
Good Morning Chairman Hinds, Chairman Cusack, and members of the committee.
I appreciate the Joint Committee on Revenue considering this piece of legislation I have filed, Senate Bill 1891, An Act encouraging employer student loan repayment, which seeks to provide relief to recent college graduates in Massachusetts from the often devastating financial burden posed by student loan debt.
Amidst widespread calls for increased revenue in Massachusetts as well as the concerted work of this committee to consider measures to meet that objective, I am aware that a proposed tax deduction may not immediately emerge as a priority. However, student loan debt has become increasingly pervasive in this Commonwealth; crippling our state’s young people, stifling their aspirations and financial outlook, and amounting to nothing short of a crisis. It is my view that this crisis demands urgent legislative action and calls for creative solutions. Creating an incentive in the form of a tax deduction for private employers to step up and participate in such a solution would represent a viable step towards providing overdue relief to people suffering under the burden of seemingly insurmountable student debt.
S.1891 would offer a tax deduction of up to $2,000 per year to employers to match principal payments made towards student loan debt of an employee. The example set by companies that have introduced student loan repayment as an employee benefit, even without this proposed incentive, illustrates that having such programs in place is beneficial to companies seeking to retain talent. Employees are more likely to remain in jobs, and are more likely to perform at a high level if their employer pays a share of their student loans. Despite this demonstrated value, Massachusetts companies have been slow to adopt student loan repayment programs. This measure would lift the financial hesitation associated with initiating a repayment.
More significant than the value to employers, however, is the difference that the tax incentive called for under this bill stands to make for recent college graduates, and indeed for mid-career professionals who may still be working to pay off loans. If student loan repayment becomes a widely-offered employee benefit, it would encourage debt-saddled job seekers to pursue career options that are better suited to their interests and skills, and in areas of our economy where there is a need for renewed talent. It would enable them to contribute to
our economy more fully, rather than diverting every spare dollar towards loan payments and allow them to solidify their financial futures by buying homes and contributing to retirement accounts. In short, this bill would go a long way towards alleviating a source of hardship that too often seems inescapable.
If there is any cause that warrants the creation of a new tax deduction, I believe it is student loan debt relief. This proposal would come at a relatively modest cost to the Commonwealth – costing between an estimated $1.8 and $6.7 million according to analysis by the Department of Revue – but would have a resounding impact on our economy and for the futures of college graduates. With these factors in mind, I hope that the committee offers S.1891 a favorable report.