Ask Congress to Increase Education Assistance

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I would like Congress to consider increasing the Employer-Provided Education Assistance amount, under IRS tax code section 127, to meet the needs of today’s students.

In 1978 Congress updated the tax code to allow for broad employer sponsored education assistance with a $5,000 annual tax free cap. In 1978 average tuition and required fees for a public 4-year institution was $1,397, according to the National Center for Education Statistics (NCES https://nces.ed.gov/programs/digest/d07/tables/dt07_320.asp Tuition at a private school for the same period was $2,958.

NCES indicates the average tuition and required fees for 2014-15 is $10,979 at Public Institutions and $23,266 at private institutions for an average of $17,385 (https://nces.ed.gov/programs/digest/d15/tables/dt15_330.50.asp?current=yes Currently the IRS tax-free cap is only $5,250. A 5% increase since 1978 compared to an average tuition increase of 686%.

I am asking Congress to increase the Section 127 tax-free annual cap to $7,528 a year. This amount equals the state with the lowest education spending per student (adjusted for 2014 inflation) according to Governing.com (http://www.governing.com/gov-data/education-data/state-education-spending-per-pupil-data.html Then increase the annual cap by the Consumer Price Index for All Urban Consumers: Education and Communication amount determined by the Federal Reserve Bank of St. Louis (https://fred.stlouisfed.org/series/CPIEDUSL

This tax policy update will reinforce America’s commitment to education and the middle class. According to the Society for Human Resource Management (2010), “the average 2007-08 annual employment earnings for Section 127 recipients were $42,711” (Executive Summary).

Thank you for considering updating the annual tax-free limit for Employer-Provided Education Assistance.

Reference:

Society for Human Resource Management. (2010). Who Benefits From Section 127?. Retrieved from https://www.shrm.org/about-shrm/press-room/press-releases/Documents/10-0418%20Coalition%20Report%20on%20Public%20Policy%20Issue-E%20P%20E%20A_FNL.pdf



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