Peanut Butter proposes to Congress a deficit-neutral approach to student debt legislation

Momentum continues to build in Congress for legislation that can help millions of workers with student debt and their employers.

Congressman Rodney Davis reported to us that he and his partners have secured 91 co-sponsors to The Employer Participation in Student Loan Assistance Act (H.R. 795/S.796) and that he has had promising discussions with principal members of Congressional leadership about the concept.

This legislation along with the HELP for Students and Parents Act (H.R. 1656) would allow employers to make up to $5,250 per year in tax-free contributions to an employee’s student debt obligations. Peanut Butter continues to support these bills in both the House of Representatives and the Senate with the goal of 100 co-sponsors by the end of the summer.

Each of these bills has been referred to the committee of jurisdiction, Ways & Means in the House and the Finance Committee in the Senate. Before the committee votes on a bill, it will need to be scored by the Joint Committee on Taxation (JCT) or the Congressional Budget Office (CBO) whose function is to assess the fiscal impact of the bill.

In order to support the leaders in Congress who are championing the solution to America’s student debt crisis, we have prepared two pieces of work:

  1. An illustration of the cost savings and risk avoidance that the Federal government can see by incentivizing employers to help pay down student debt, thereby reducing the 11.2 percent delinquency rate on America’s $1.2 trillion federal student loan portfolio (which is part of America’s $1.4 trillion total student loan burden). We’re honored to collaborate with another leading benefit communications firm, Jellyvision on this project. JCT’s answer might be as simple as ‘Peanut Butter & Jellyvision.
  2. An alternative legislative proposal that would allow employers to make tax-deferred contributions to employee’s student debt through the 401(k) code in a way that is deficit-neutral to the Federal budget. The balance of this post will explain the proposal in detail.


Peanut Butter partnered with one of America’s largest retirement plan providers to develop an alternate deficit-neutral proposal. ¬†

The proposal we’ve drafted would amend the IRS Code to allow employers’ matching 401(k) contributions to be applied to the employee’s qualified student debt obligations. Key highlights include:

  • Struggling workers receive pre-tax employer assistance with student debt
  • More student debt holders are able to save more money for retirement
  • ‘Cost’ is neutral to the Federal budget
  • No cost, low friction for employers drives rapid adoption
  • Fair to workers at all income levels
  • Encourages workers to establish a bit of savings


A summary of the proposal can be found here, and a legislative draft is available here. This proposal¬†evolves concepts and constructs identified in RISE Act and The Aspen Institute’s Initiatives Toward a New Capitalism.

In a late June visit to Capitol Hill, we received positive feedback on the proposal from several members of the Ways & Means Committee.

America’s student debt crisis is getting worse — according to MarketWatch, we’re adding nearly $2,726 in student debt per second. The time is now for the Federal government to enact a solution that further aligns the interests of employers.

We continue to support all leaders in Congress who are focused on enacting a solution to America’s $1.4 trillion student debt crisis.