A bill that would allow Americans to pay for college or pay back student loans by dipping into their 401(k)s or individual retirement accounts has been introduced in the Senate.
Sen. Rand Paul, R-Ky., proposed the Higher Education Loan Payment and Enhanced Retirement Act, referred to as the HELPER Act, on Monday.
The bill would allow Americans to annually take up to $5,250 from a 401(k) or IRA — tax and penalty free — to pay for college or pay back student loans. These funds could also be used to pay tuition and expenses for a spouse or dependent.
"Instead of empowering the federal government to increase its involvement in education, which will only raise costs even higher and further lower the value of our dollars to cover them, we can empower the American people to reduce the burden of debt, realize the dreams they studied hard to achieve, and grow their retirement savings," Mr. Paul said in a news release.
The bill would also offer workers the choice to have an employer contribution to a 401(k) count as a Roth contribution. The move would allow workers to pay the taxes right away, "freeing their savings to grow tax free and giving them greater financial security after they retire," the new release said.
Moreover, the bill would allow employer-sponsored student loan and tuition payment plans to be tax free up to $5,250, and it would repeal the cap on deducting student loan interest.
