What's happening
This bill allows employers to create pre-tax student loan repayment accounts for employees, with employer matching contributions eligible for a tax deduction, up to a statewide $70 million annual cap.
Why it matters
Encourages employers to help pay down employees’ student debt. , potentially making jobs at participating companies more attractive to those with significant student loans and aiding workforce recruitment and retention.
Limits both employee and employer contributions to $5,000 per year per employee. , ensuring the benefit is meaningful but not unlimited, and targeting support at a level that could make a noticeable dent in annual student loan payments.
Directs state agencies (the comptroller and higher education services corporation) to oversee and manage these accounts. , adding oversight and potentially reducing risk of misuse, while also introducing new administrative processes for employers and employees.
Imposes a 10% penalty on improper withdrawals. , deterring use of these accounts for anything other than student loan repayment and mirroring rules similar to retirement accounts, which could impact employees’ financial planning and tax situations.
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Who cares
Employees with student loans
Participating employees could deposit up to $5,000 annually in pre-tax income for undergraduate or graduate loan repayments, with a 10% penalty for unauthorized withdrawals.
Employers
Employers could establish accounts and deduct matching contributions of up to 100% of employee deposits, capped at $5,000 annually per employee account.
State comptroller and Higher Education Services Corporation
They would jointly manage the accounts and collect information needed from participating employers and employees.
Department of Taxation and Finance
The tax commissioner would help write implementing rules and suspend both employer matching-contribution deductions once aggregate tax expenditures and taxes forgone reach $70 million.
Headline styles
Create Student Loan Repayment Accounts
Plain English, a few words. Used as the page title.
Sponsors
3 Co-sponsors
History
- Referred to higher education
- Referred to higher education
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
1125
2025-2026 Regular Sessions
IN SENATE
January 8, 2025
Introduced by Sens. OBERACKER, BORRELLO, GALLIVAN, RHOADS -- read twice and ordered printed, and when printed to be committed to the Committee on Higher Education
AN ACT to amend the education law and the tax law, in relation to establishing student loan repayment accounts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The education law is amended by adding a new section 682 to read as follows:
§ 682. Student loan repayment accounts. 1. An employer is hereby authorized to establish student loan repayment accounts which shall permit their employees to deposit a portion of their pre-tax income, up to five thousand dollars annually, into such accounts solely for undergraduate or graduate student loan repayments. Employers electing to establish such accounts may contribute matching funds to an employee's student loan repayment account and shall receive a tax deduction for such contributions. Such contribution may be up to a maximum of one hundred percent of the employee's deposit, up to five thousand dollars annually, per employee account.
2. For the purposes of this section, "student loan" shall mean the cumulative total of the annual student loans covering the cost of attendance at an undergraduate or graduate college or university, and any interest thereon.
3. Employee student loan repayment accounts shall be established for the deposit of funds to be used by the employee solely for repayment of student loans. Such accounts shall be managed by the comptroller and the higher education services corporation. All participating employers and employees shall provide the comptroller and the corporation with all necessary information in order to implement the provisions of this section.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03495-01-5
4. Moneys in a student loan repayment account shall be available only for repayments of student loans as defined in this section. Any withdrawal or distribution from a student loan repayment account which violated the provisions of this subdivision shall be subject to a penalty of ten percent on any such withdrawal or distribution.
5. The commissioner and the commissioner of taxation and finance shall jointly promulgate rules and regulations necessary to implement the provisions of this section.
§ 2. Subdivision 9 of section 208 of the tax law is amended by adding a new paragraph (u) to read as follows:
(u) A taxpayer establishing student loan repayment accounts pursuant to section six hundred eighty-two of the education law shall be allowed a deduction from entire net income in an amount equal to the total amount of matching contributions made to employees' student loan repayment accounts by a taxpayer during the taxable year.
§ 3. Subsection (c) of section 612 of the tax law is amended by adding a new paragraph 17 to read as follows:
(17) The amount equal to the total amount of matching contributions made by a taxpayer during the taxable year to employees' student loan repayment accounts established pursuant to section six hundred eightytwo of the education law.
§ 4. Notwithstanding any provision of the tax law to the contrary, the aggregate of tax expenditure and taxes forgone pursuant to sections two and three of this act shall not exceed $70,000,000. The commissioner of taxation and finance shall immediately suspend both deductions established pursuant to such sections upon reaching the $70,000,000 threshold.
§ 5. This act shall take effect on the sixtieth day after it shall have become a law and shall apply to taxable years commencing on or after such effective date. Effective immediately the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized to be made and completed on or before such date.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the education law and the tax law, in relation to estab- lishing student loan repayment accounts
Purpose
This bill would allow employers to establish tax-deductible student loan repayment accounts.
Summary of provisions
Section 1 of the bill amends the education law to authorize employers to create student loan repayment accounts. Employees will be allowed to deposit up to, $5,000 of their pre-taxable income annually. Employers may contribute matching funds to an employee's student loan repayment account up to a maximum 100% of the employee's contribution. The student loan accounts shall be managed by the comptroller and the higher educa- tion services corporation.
Section 2 adds a new paragraph that establishes student loan repayment accounts, which allow a deduction from entire net income in an amount equal to the total amount of matching contributions made to employees' student loan repayment accounts by a taxpayer during the taxable year.
Section 3 establishes adds a new paragraph that states the amount equal to the total of matching contributions made by a taxpayer during the taxable year to employees' student loan repayment accounts be estab- lished pursuant to section six hundred eighty-two of the education law.
Section 4 states that the aggregate of tax expenditure and taxes forgone shall not exceed $70,000,000.
Section 5 lists the effective date.
Justification
New Yorkers of all ages are currently facing heavy financial burdens due to high amounts of student loan debt. Many families are struggling with this burdensome debt while trying to provide for their families, attempting to establish careers, and buy homes within the state.
In 2015, 17.9% of college graduates in New York State had accumulated approximately $32,000 in student loan debt (The Federal Reserve Bank of New York). Studies have shown that people younger than 40 years old continue to have approximately 65% of outstanding higher education debt.
According to a 2016 study by the Society of Human Resource Management, only 4% of companies are currently offering student loan repayment assistance. This bill aims to raise that percentage and to create a better environment for both employees and employers.
Student loan repayment accounts would help businesses and employers in New York to attract and retain highly qualified employees. By providing opportunities for our citizens to be successful contributors to our
economy, we are paving the way for a better business climate as well as a stronger workforce in the State of New York.
Legislative history
2023-2024 S5109
2021-2022 S5298
2019-2020 S341A
2017-2018 S6240
Fiscal implications
The program shall not exceed $70 million annually.
Effective date
Sixty days after becoming law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.