HR Policy Supports Proposals to Strengthen Employer-Provided Education Assistance

July 16, 2021

Representatives Danny Davis (D-IL) and Jason Smith (R-MO) introduced two HR Policy-supported bills to strengthen and expand employer-provided education assistance as provided in Section 127 of the Internal Revenue Code.

Background:  The Coronavirus Aid, Relief and Economic Security (CARES) Act, signed into law in March 2020, amended Section 127 by allowing employers to provide up to $5,250 in tax-exempt student loan repayment contributions from March 27, 2020 through Dec. 31, 2020.  The Consolidated Appropriations Act of 2021 subsequently extended this benefit through December 31, 2025.

The Upskilling and Retraining Assistance Act (H.R. 4411) would increase the annual tax-free benefit from $5,250 to $12,000 for two years (2021 and 2022) and expand the benefit to include amounts paid for education-related tools and technology such as hand tools and construction equipment, computers, software, internet access and related services, and licensure fees.  Senators Maggie Hassan (D-NH), Todd Young (R-IN), Catherine Cortez-Masto (D-NV) and Tim Scott (R-SC) introduced the companion bill, S. 1802, in May. 

The Upward Mobility Act (H.R. 4428) would permanently increase the benefit to $12,000 and index it for inflation.  Like the bill in the last session of Congress, the Upward Mobility Act limits the expansion of the benefit to undergraduate course work to keep the fiscal cost down and increase the chances of enactment. 

HR Policy Association supports both measures as a member of the Coalition to Preserve Employer-Provided Education Assistance, a group of business, labor, and education organizations dedicated to expanding and strengthening Section 127 of the Internal Revenue Code. 

Outlook:  As lawmakers continue to consider legislation to support the workforce, including workforce development to revitalize the U.S. economy, it is possible that the Upskilling and Retraining Assistance Act could get attached to a viable legislative vehicle this Congress, especially since the bill has bipartisan, bicameral support.