Sen. Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee, on Monday introduced a bill aimed at making it easier for those with student loan debt to save for retirement.
Under the bill, companies would be able to make matching contributions to the retirement plans of employees who are making student loan repayments.
Currently, companies can only provide matching contributions to their employees’ 401(k) plans if the employees themselves are contributing to the plans. That means that employees who can’t afford to contribute to their retirement accounts because they are still paying off student loans have to go without employers’ matching contributions.
Wyden is proposing the change so that recent college graduates with student loan debt don't have to miss receiving retirement contributions from their employers.
“Millions of college grads are buried under tens of thousands of dollars in student loan debt that prevents them from building their future — buying a home, saving for retirement and starting a family,” Wyden said in a statement.
“The sooner workers start to save for retirement the better, and paying down student loans shouldn’t stop them from building their nest egg. While a comprehensive response to the student loan debt crisis is needed, this policy change is an important piece of the puzzle.”
Millennials in particular tend to be less prepared for retirement than earlier generations at the same stage in life, with 40 percent having no dedicated retirement savings. Of those with dedicated retirement savings, a third have saved $15,000 or less, according to the Employee Benefit Research Institute.
The bill is co-sponsored by Democratic Sens. Maria Cantwell (D-WA), Ben Cardin (D-Md.), Sheldon Whitehouse (D-RI) and Sherrod Brown (D-OH), who are also members of the Finance Committee.
The bill was introduced yesterday, one day before today’s Finance Committee hearing on “challenges in the retirement system.” Lawmakers on both sides of the aisle and in both chambers of Congress are interested in passing legislation this year to encourage retirement savings.
Wyden and Finance Committee Chairman Chuck Grassley (R-Iowa) jointly introduced their Retirement Enhancement and Savings Act (RESA) legislation in April that includes a host of other provisions aimed at making it easier for people to save for retirement.