As a writer and blogger on the topic of scholarships, I teach student how to find and win scholarships so they can avoid student debt entirely. However, that’s not always possible and many students find themselves struggling to make payments, moving back to their parents’ home, and taking any job just to write that monthly student loan check.
My son and I are both first-generation students carrying student loan debt. One night during dinner, we had a discussion about measures that could be taken by Congress that would help students and families struggling with student loan payments. Here’s what we came up with:
1. The ability to make pre-tax payments towards student loans through payroll deductions, similar to a Health Savings Account (HSA).
2. Accounts employers can match employee contributions into, similar to a 401K, whose sole purpose is to make payments toward student loans at the end of the year. Tax benefits to employers that participate.
3. Immediate Relief Act needed to allow Americans to tap into 401K/retirement accounts without penalty in order to make payments on student debt. A retirement account does no good when the profit being earned is surpassed by the interest compiling on student debt. Many unemployed or underemployed Americans need penalty-free access in order to “restart.”
4. Federal and State taxes charged to Americans for income-earning accounts such as savings, money market, or capital gains on investments should be credited back if the taxpayer can demonstrate they have made payments of an equal or greater value on student debt.
5. Tax credits on all money paid toward student loan debt—not just interest.
6. Financial incentives such as interest rate or principal reduction for Americans making fair payments on student debt during period of deferment or forbearance.
Would any of these 6 policy changes help you? Can you add other measures that would help?