WASHINGTON – Today, U.S. Sens. Mark R. Warner (D-VA) and John Thune (R-SD), alongside U.S. Reps. Nicole Malliotakis (R-NY-11) and Scott Peters (D-CA-50), introduced the Employer Participation in Repayment Act – bipartisan legislation to help Americans tackle their student loan debt by making permanent a provision that allows employers to contribute up to $5,250 tax-free to their employees’ student loans.

In 2020, Sens. Warner and Thune along with Rep. Peters negotiated the inclusion of a provision in the CARES Act that allowed these contributions temporarily. Later that year, as part of the government spending package, they secured an extension allowing this benefit until January 1, 2026. By making this tax benefit permanent, today’s legislation would provide employees with much-needed relief and employers with a unique and permanent tool to attract and retain talented employees.

“As the first in my family to graduate from college, I wouldn’t have been able to afford my tuition without the help of student loans,” said Sen. Warner. “Unfortunately as the cost of higher education continues to skyrocket, so has the rate of Americans who turn to student loans to pay for college. Today too many Americans are saddled with tough-to-manage student loan debt, with no end in sight. That’s why I’ve teamed up with Sen. Thune to create an innovative, bipartisan approach to help ease the burden of student loans. By making employer student loan repayments tax-exempt, employers will have a tool to recruit and retain a talented workforce while also helping working Americans manage their financial future.”

“Incentivizing employers to help repay their employees’ student loans was a common-sense step Congress took to address the high levels of student debt that borrowers face,” said Sen. Thune. “This bill would permanently equip employers with this unique tool to help attract and retain talented employees while protecting American taxpayers from costly burdens. This is a win-win for graduates and their employers, and I hope it will once again garner strong, bipartisan support.”

“Over the past 20 years, the cost to attend college has risen 45 percent, forcing students to choose between pursuing higher education and taking on tens of thousands of dollars in burdensome student loan debt,” said Rep. Malliotakis. “Our bipartisan legislation enables employers to contribute up to $5,250 per year, tax-free, toward their employees’ student loans—helping those entering the workforce pay down debt faster and build a stronger financial future. This tax incentive will continue to strengthen our workforce, increase our nation’s competitiveness, and provide much-needed economic relief to millions of Americans.”

“I relied on student loans to get through college when the cost of higher education was much lower than it is today. Now, the collective debt among Americans is $1.7 trillion, which limits our economic growth and the economic prospects of young adults,” said Rep. Peters. “Over the last five years, this program has been a huge success — employers have helped pay off thousands of employees’ loans and it gave employers a tool to compete for the best talent. This public-private collaboration has proven itself as a cost-effective solution to the student debt crisis and it is imperative that we make it permanent.” 

Americans owe a combined $1.77 trillion dollars in student loan debt, according to the most recent quarterly report from the Federal Reserve. This debt is a significant financial burden that not only influences the way the American workforce saves and spends, but also has a stifling effect on the economy. This legislation would update an existing federal program so that it works better for employees living with the reality of burdensome student loan debt.

The legislation has support from numerous educational organizations and business groups.

“The National Association of Independent Colleges and Universities (NAICU) is pleased to support bipartisan legislation that would make permanent the expansion of IRC Sec. 127. This expansion to allow student loan repayment assistance should absolutely be a permanent benefit and not expire next year as currently scheduled.  This assistance helps working students, employers, and ultimately the U.S. economy. Section 127 benefits play a critical role in maintaining U.S. competitiveness and preventing the accumulation of student debt by enabling employers to fund the training, development and education of their employees, without imposing tax burdens on those employees for the education they receive.  Employees use these benefits to pursue their educational and career goals and use amounts provided by their employer to either help pay for the cost of tuition or repay student loans,” said Karin Johns, Director of Tax Policy, National Association of Independent Colleges and Universities.

“The bipartisan and bicameral Employer Participation in Repayment Act will reduce borrowers’ student loan burdens and encourage successful repayment. In turn, it gives employers a permanent tool with which to attract a stable workforce. EFC is proud to endorse this legislation, and we look forward to collaborating with you to advance public policies that appropriately balance the interests of student loan borrowers, employers, and taxpayers,” said Gail daMota, President, Education Finance Council.

“The U.S. Chamber supports the Employer Participation in Repayment Act because it allows employers voluntarily to provide a valued employee benefit that helps their employees’ financial well-being,” said Chantel Sheaks, Vice President, Retirement Policy, U.S. Chamber of Commerce

“Candidly has facilitated more than $100M in tax-free Student Loan Employer Contributions to help employees pay down their debt faster, as a workplace benefit, resulting in a whopping 67% reduction in turnover across participating workers. Permanency is crucial to sustaining and scaling this highly efficacious new category of benefit into a new normal,” said Laurel Taylor, CEO, Candidly.

“Fidelity Investments commends the bipartisan re-introduction of the Employer Participation in Repayment Act. Permanently extending this important incentive is critical to the American workforce’s financial wellness. As a market leader for student debt workplace benefits since 2016, Fidelity has enabled hundreds of employers across a wide range of industries to seamlessly contribute to and ease the student debt burden for their employees. To date, these employers have helped more than 100k employees save more than $500mn and an average of 3-4 years in payments. The growth and popularity of these benefits have accelerated since the introduction of this provision as part of the 2020 CARES Act, and we look forward to working with Congress to enact this legislation permanently into law,” said Jesse Moore, Senior Vice President, Head of Student Debt at Fidelity Investments.

"We commend Senators Thune and Warner, along with Representatives Malliotakis and Peters, for their leadership in introducing the Employer Participation in Repayment Act. Making the student loan repayment expansion permanent is a critical step toward easing the financial burden on millions of Americans while empowering businesses to attract and retain top talent. This bipartisan, bicameral effort underscores a shared commitment to workforce development, economic growth, and financial well-being for employees nationwide. We urge Congress to pass this legislation and ensure long-term support for student loan repayment benefits,” said Chatrane Birbal, Vice President of Policy and Government Relations at the HR Policy Association. 

“SHRM strongly supports the reintroduction of the Employer Participation in Repayment Act, a bipartisan bill that would permanently allow employers to assist employees in repaying their student loans. At SHRM, we have long championed policies that empower employers to provide education assistance programs that align with the evolving needs of the workforce. This legislation is key to strengthening the education-to-employment pipeline—ensuring that individuals can pursue and complete their education without being burdened by overwhelming debt, while also helping employers build a skilled and competitive workforce. This legislation provides a commonsense solution that would benefit workers, workplaces, and the economy,” said Emily M. Dickens, Chief of Staff and Head of Government Affairs at the Society for Human Resource Management.

“We commend the introduction of bipartisan legislation to permanently extend the student loan repayment benefit under Section 127. Supporting efforts by employers to offer education or debt relief to their employees is both economically and fiscally responsible. This bill is a crucial step towards modernizing Section 127 of the tax code, addressing the evolving needs of employees, and ensuring our workforce remains competitive. InStride is dedicated to reducing the burden of student debt and expanding economic opportunities through innovative employer-sponsored education programs. This legislative effort aligns with our mission and helps create a more financially resilient workforce,” said Craig Maloney, CEO, InStride.

“The National Association of REALTORS ® (NAR) has long supported efforts to ease the burden of student loan debt. The Employer Participation in Repayment Act is a useful tool in easing the weight of student debt. NAR applauds the leadership from Representatives Peters and Malliotakis and Senators Warner and Thune in making this change permanent. This legislation creates a win-win for both employers in search of attracting and maintaining talented workers and employees who will receive relief on their debt, enabling them to save money for important life decisions like purchasing a home,” said National Association of Realtors® President Kevin Sears.

“Extending the tax exclusion for employer-provided student loan repayment assistance is crucial for today’s U.S. workforce and is 100% aligned with employer perspectives on these benefits,” said Scott Thompson, CEO of Tuition.io. “As the cost of higher education continues to skyrocket, this benefit enables companies to foster a more educated and skilled workforce, while helping their employees cover basic living expenses, a challenge for so many people today. Since Tuition.io started administering contributions in 2016, employers on our platform have helped pay down student loan debt for hundreds of thousands of employees in key sectors like healthcare, manufacturing, and technology. We at Tuition.io strongly support making these benefits under Section 127 permanent, as their removal would be a significant setback for both corporations and their employees.”

"The introduction of this bill is a huge step in the right direction and, when passed, will be a major win for companies, employees, and society at large. Tax-free employer contributions to student loans is a great way to help employees pay back student loans while providing a unique incentive for employees to align with company priorities. As the cost of education has and will likely continue to rise, this benefit will help alleviate the financial stress employees have incurred in order to gain employment. Permanently including employer student loan contributions under tax-free educational assistance will help pave the way for more employers to play a massive role in solving the student debt crisis,” said Mick MackLaverty, CEO of Highway Benefits.

“We are proud to support this initiative and grateful to Congressmember Peters for his dedication to San Diego’s small businesses,” said Jessica Anderson, Interim President and CEO of the San Diego Regional Chamber of Commerce. “The Employer Participation in Repayment Act of 2025 will expand the benefits employers can offer by assisting with student debt repayment, in turn helping small businesses attract and retain talent in a competitive workforce. 

Full text of the legislation can be found here. A summary of the legislation can be found here.

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