U.S. Sen. Ron Wyden (D-OR), ranking member of the Senate Finance Committee, and five Senate colleagues introduced legislation on May 13th that could help many college graduates save for retirement while paying off their student loans.

The Retirement Parity for Student Loans Act would permit employers to make a matching contribution to an employee’s retirement plan while that employee is paying off student loans. Current law only allows for an employer to match contributions made directly by an employee to a 401(k) retirement plan. Under the proposal, recent graduates who cannot afford to save money for retirement above their student loan repayments would no longer have to forego the employer match.          

For example, if an employee’s student loan payment is $500 and his or her employer matches 50 percent of retirement plan contributions, the employer would contribute $250 to the employee’s retirement account.

According to the Employee Benefit Research Institute, 45% of family heads under the age of 35 have student debt, with the median amount of debt owed rising from $5,363 in 1992 to $19,000 in 2016.

“Millions of college grads are buried under tens of thousands of dollars in student loan debt that prevents them from building their future—buying a home, saving for retirement and starting a family,” said Sen. Wyden. “The sooner workers start to save for retirement the better, and paying down student loans shouldn’t stop them from building their nest egg.”     

The Act would be a voluntary benefit that employers may elect not to offer employees and can be provided only to workers who are eligible to participate in the employer’s retirement plan.

For more information on the Retirement Parity for Student Loans Act, click here.