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Dr. Rand Paul Introduces HELPER Act to Reduce Student Loan Debt and Increase Retirement Savings

FOR IMMEDIATE RELEASE:
December 3, 2019
 Contact: Press@paul.senate.gov, 202-224-4343

WASHINGTON, D.C. – Yesterday, U.S. Senator Rand Paul (R-KY) introduced S. 2962, the Higher Education Loan Payment and Enhanced Retirement (HELPER) Act, a pro-taxpayer plan to help Americans more quickly and easily pay off their student loan debt and save more money for retirement.
 
“Instead of empowering the federal government to increase its involvement in education, which will only raise costs even higher and further lower the value of our dollars to cover them, we can empower the American people to reduce the burden of debt, realize the dreams they studied hard to achieve, and grow their retirement savings,” said Dr. Paul.
 
As U.S. student loan debt hits its highest-ever levels, Dr. Paul’s HELPER Act would allow Americans to annually take up to $5,250 from a 401(k) or IRA — tax and penalty free — to pay for college or pay back student loans. These funds could also be used to pay tuition and expenses for a spouse or dependent. 
 
The plan would enable two parents and a child, for example, to put over $15,000 in pre-tax funds in one year toward tuition or loan repayment if each set aside the maximum. Currently, Americans can only pay for their student loans with after-tax money, placing an unnecessary constraint on their budget.
 
The bill would also allow employer-sponsored student loan and tuition payment plans to be tax free up to $5,250, and it would repeal the cap (and the phasing out) on deducting student loan interest, as student loans do not disappear when someone earns more money throughout their career.
 
To help give Americans the opportunity to save as much as possible for retirement, Dr. Paul’s HELPER Act would also offer workers the choice to have an employer contribution to a 401(k) count as a Roth contribution. While current law defers the taxes on employer contributions, forcing Americans to pay taxes on the funds and its gains in retirement, this change would allow workers to pay the taxes right away, freeing their savings to grow tax free and giving them greater financial security after they retire.
 
Although individuals can set up 401(k) or IRA plans on their own, and would be able to take advantage of the bill’s reforms to use pre-tax dollars to pay down their student debt, passing the HELPER Act will encourage more employers to offer 401(k)s or education benefit plans if they do not currently do so, as more workers will be able and incentivized to use such plans.
 
You can read S. 2962 below, and you can find more details in a one-pager HERE.

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