Bill would make feds' student loan payments tax-free

As part of Congress' continuing effort to create recruitment incentives, a pair of lawmakers today introduced companion House and Senate bills to remove taxes imposed on employees for the student loans their agencies pay.

Currently, agencies can offer potential employees loan repayment of up to $6,000 a year with a $40,000 cap per employee, but the incentive is taxed. Under the proposal from Rep. Tom Davis (R-Va.) and Sen. George Voinovich (R-Ohio), employees would no longer have to pay taxes on the benefit.

'This bill simply puts the federal government's own loan forgiveness program on par with similar loan forgiveness programs sponsored by educational institutions and nonprofit organizations,' Davis, chairman of the Government Reform Committee, said in a statement. 'If nothing is done to improve recruitment and retention in the federal government, service to the American people will suffer.'

Davis said the bill, the Generating Opportunity for Forgiving Debt for Services Act, could help increase college graduates' interest in working for the government because the number of students taking out loans has nearly doubled since 1992.


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