WASHINGTON D.C. – Congressman Darin LaHood (R-IL) along with Congressman Danny Davis (D-IL) introduced the Retirement Parity for Student Loans Act of 2020 today. The legislation would permit 401(k), 403(b), SIMPLE and governmental 457(b) retirement plans to make matching contributions to workers as if their student loan payments were salary reduction contributions. Thereby reducing student loan debt and building retirement savings. The bipartisan legislation has six original cosponsors.
“Individuals who are working hard to pay off their student loans shouldn’t lose out on opportunities to put away money for retirement,” said Rep. LaHood. “This legislation will allow workers to continue to make student loan payments while receiving employer matching contributions into their retirement plan. I am proud to join my Ways and Means colleague, Rep. Danny Davis to introduce this commonsense legislation that will provide greater financial security to individuals across Illinois.”
“Student loan debt has reached the $1.5 trillion figure. Americans carry more student loan debt than auto loans and credit cards. In addition, student loan debt disproportionately affects those entering the workforce and young professionals. Many employees cannot afford to pay student loan debt and contribute to a 401 (k) or retirement plan,” said Congressman Davis. “This approach provides additional resources to the employees to build their retirement savings while reducing their student loan debt”
Entry level and low salary employees face financial obstacles to significantly reducing student loan debt and the absence of disposable income reduces the likelihood of adequate investment into retirement plans. This bill helps workers who cannot afford to both save for retirement and pay off their student loan debt.
Fidelity Investments applauds Congressmen Davis and LaHood for introducing the Retirement Parity for Student Loans Act of 2020. As a leading provider of retirement and student debt benefits, Fidelity supports policies that help workers repay student debt while saving for retirement. We are pleased that policymakers are advancing employer-sponsored student debt assistance benefits and appreciate that the bill allows workers to save for retirement while repaying their student debt.
“Tackling our nation’s student debt challenge will require creative thinking and a strong commitment from American employers to help share the costs of developing an educated workforce. We applaud Rep. Davis and other supporters for being champions for financial health and wellness. This bill will ensure that employees of all ages that have education loans are able to take advantage of federal policies that support retirement savings,” said Nat Hoopes Executive Director of the MLA Student Loan Refinancing and Repayment Benefit Coalition.
Sen. Ron Wyden (D-OR) introduced similar legislation in the Senate.
The Retirement Parity for Student Loans Act of 2020 has been endorsed by the Marketplace Lending Association, American Benefits Council, Commonbond, Empower, ERISA Industry Committee, FutureFuel.io, Justworks, Inc., NAPEO (National Association of Professional Employer Organizations), SoFi and Tuition.io, American Institute of Architects & Fidelity Investments
