- A new bipartisan bill aims to improve retirement benefits for American workers.
- Part of it would allow employers to make contributions into the 401(k) that matches workers’ student loan repayments.
- This means that debtors would not have to choose between saving for retirement and paying off their debts.
Congress has its sights set on retirement.
Thursday, the senses. Ron Wyden of Oregon and Mike Crapo of Idaho officially presented the Enhancing American Retirement Now (EARN) Act. The bipartisan legislation — which comes from Wyden, a Democrat and Senate finance chairman, and Crapo, a Republican — aims to bolster retirement benefits.
“Americans deserve dignified retirements after decades of hard work, and our bill is an important step forward,” Wyden said in a statement Thursday announcing the bill. “Under our reforms, many more workers would have access to resources for retirement and would see meaningful federal pension contributions year after year.”
Wyden and Crapo said they hoped the Senate would approve it by the end of the year.
Tucked inside the legislation: A provision to help student loan debtors save for retirement. Under the legislation, employers could pay contributions to 401(k) accounts for workers with student loan debt who cannot contribute money to their 401(k). The payments borrowers make for their student loans would be treated as their contribution amount to be matched by employers.
“We know that the burden of student loans is enormous for young workers. When they enter the workforce, they often have to make difficult choices about their salary, what to do and whether to repay their debts. loans or if they should start saving for a workplace retirement plan,” Paul Richman, director of government and policy affairs at the Insured Retirement Institute (IRI), told Insider. receive advice on how to pay off their debt, which is a good thing.”
But this provision “really provides an opportunity for those with student loan debt to repay their loans and not have to make that difficult choice,” Richman said, allowing debtors to build their retirement nest egg.
“We think it will really help increase the amounts young workers save by providing this option,” Richman said. Student loan debt can prevent borrowers from accumulating generational wealth, a problem keenly felt by black borrowers, who carry disproportionate amounts of debt.
The introduction of this legislation comes after President Joe Biden announced up to $20,000 in student loan forgiveness for federal borrowers earning less than $125,000 a year at the end of August. It is expected to completely wipe out the balances of 20 million borrowers – and could also help many older borrowers who have been paying off their loans for decades and are postponing retirement.
A 64-year-old borrower, for example, previously told Insider that he never sees his $265,000 student debt going away.
“It’s an endless cycle where the loan can never be paid off unless I get a windfall and pay it all off or I die and it’s gone,” he said. “I don’t know if I’ll be able to work until I’m 80.”
Since Biden’s loan forgiveness is a one-time general relief, many lawmakers and advocates have insisted more permanent solutions are needed, and Wyden and Crapo’s bill could help manage student debt in the future.