Washington, D.C. – Senate Finance Committee Ranking Member Ron Wyden, D-Ore., and four colleagues today introduced legislation to give working Americans the ability to save for the future while repaying their student loans.
The bill is cosponsored by Senators Maria Cantwell, D-Wash., Ben Cardin, D-Md., Sheldon Whitehouse, D-R.I., Maggie Hassan, D-N.H., and Sherrod Brown, D-Ohio.
Under current law, employers may only make “matching” contributions to a 401(k) retirement plan if employees are also making contributions. The Retirement Parity for Student Loans Act would allow employers to make matching contributions to a retirement plan while their employees make student loan repayments. Under this proposal, recent graduates who cannot afford to save money for retirement above their student loan repayments would no longer have to forego the employer match.
For example, if an employee’s student loan payment is $500 and his or her employer matches 50 percent of retirement plan contributions, the employer would contribute $250 to the employee’s retirement account.
“Millions of college grads are buried under tens of thousands of dollars in student loan debt that prevents them from building their future—buying a home, saving for retirement and starting a family. The sooner workers start to save for retirement the better, and paying down student loans shouldn’t stop them from building their nest egg,” Wyden said. “While a comprehensive response to the student loan debt crisis is needed, this policy change is an important piece of the puzzle.”
According to the Employee Benefit Research Institute, households headed by a person age 35 or younger with a college degree and no student loan debt report median defined contribution account balances of $20,000—compared to $13,000 for similar families that have student loan debt.
A web version of this release is available here.