Congress has its eye on retirement.
On Thursday, Sens. Ron Wyden of Oregon and Mike Crapo of Idaho formally introduced the Enhancing American Retirement Now (EARN) Act. The bipartisan legislation — which comes from Wyden, a Democrat and Senate Finance chair, and Crapo, a Republican — aims to beef up retirement benefits.
“Americans deserve dignified retirements after decades of hard work, and our bill is an important step forward,” Wyden said in a statement on Thursday announcing the bill. “Under our reforms, many more workers would access resources for retirement and see meaningful federal retirement contributions year after year.”
Wyden and Crapo said they hope the Senate approves it by the end of the year.
Tucked inside the legislation: A provision to help student-loan debtors save up for retirement. Under the legislation, employers could pay in contributions to 401(k) accounts for workers with student loan debt who can’t put money towards their 401(k). The payments borrowers make toward their student loans would be treated as their contribution amount for employers to match.
“We know that student loan burden is tremendous on younger workers. When they’re entering the workforce, they often have to make difficult choices about their salaries, what they should do, and whether they should repay their loans or whether they should start saving for a workplace retirement plan,” Paul Richman, the chief government and political affairs officer at the Insured Retirement Institute (IRI), told Insider. “Oftentimes, folks are receiving advice that they should pay down their debt, which is a good thing.”
But this provision “really provides the opportunity for those who have student loan debt to pay off their loans and not have to make that difficult choice,” Richman said, allowing debtors to build their retirement nest eggs.
“It really, we think, will help increase the amounts that younger workers are saving by offering this option,” Richman said. Student loan debt can shut borrowers out of accumulating generational wealth, a problem acutely felt by Black borrowers, who carry disproportionately high amounts of debt.
The introduction of this legislation comes after President Joe Biden announced up to $20,000 in student-loan forgiveness for federal borrowers making under $125,000 a year at the end of August. It’s expected to completely wipe out balances for 20 million borrowers — and could also help a lot of older borrowers who have been paying off their loans for decades and pushing off retirement.
One 64-year-old borrower, for example, previously told Insider that he doesn’t see his $265,000 student-debt load ever going away.
“This is an endless cycle where the loan can never be paid off unless I have a windfall and pay it all or I die and it goes away,” he said. “I don’t know if I’ll be able to work into my 80s.”
Given Biden’s loan forgiveness is one-time blanket relief, many lawmakers and advocates have insisted more permanent solutions are needed, and Wyden and Crapo’s bill could help manage student-debt loads in the future.
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