The student loan debt crisis is a major problem in the U.S., and it’s not just current college students who are struggling to repay their student loans. Millions of parents have also taken out loans to help their children pay for college, and they are facing the same challenges as students. In recognition of the burden carried by parents with student loan debt, a new piece of legislation is being proposed in Congress. The Alleviating Intergenerational Debt (AID) Act aims to provide new benefits to parents who have taken out loans to help their children pay for college (Source: stevens.house.gov).
What would the legislation do?
Key provisions of the AID Act aim to lessen the financial burden for parents who carry student loan debt.
- Amend the Student Aid Index (SAI). The SAI is a financial aid tool that simplifies the Free Application for Federal Student Aid (FAFSA). The AID Act would amend the SAI to include a student loan allowance calculation.
- Allow parents to deduct a portion of their student loan debt from their taxable income. $4,000 or 15% of the parents’ outstanding loan amount, whichever is less, would be subtracted from their income in determining the Student Aid Index level (Source: congress.gov).
What can parents do right now?
While this proposed legislation could offer needed relief for parents with student loan debt, it faces a tough uphill battle and could take time to implement if it does ever get signed into law. However, there are a number of existing solutions that could help parents manage their student loan debt. These include:
How can employers help?
The AID Act is in the very early stages of being introduced in Congress and while this proposed legislation could offer needed relief for parents with student loan debt, it could take time to implement if and when it’s signed into law. In the meantime, employers can help their employee student loan borrowers at all stages of their lives improve their student loan outlook.
- Provide employees with student loan insight and counseling.
- Help employees reduce their student loan balance and the time it takes to pay it off.
- Promote financial wellness and education on topics like budgeting, savings, and retirement.
Did you know? Attigo can help with these solutions. From providing high-touch personalized student loan conversations with Student Loan Success Center™ to implementing a Student Loan Repayment Assistance benefit with Co-Pay Partners®, we can help your employees get the assistance they need to achieve student loan repayment success.
