ASK MICKEY, CPA, CVA
QUESTION I heard employers can help students pay their student debt, is this true?
ANSWER Yes, it’s true. Some employers offer student loan repayment assistance as part of their employee benefits package. This perk has become increasingly popular as student loan debt continues to be a significant financial burden for many workers. Here are some key points about employer-sponsored student loan repayment assistance:
1. Tax Benefits: The CARES Act, passed in March 2020, included a provision that allowed employers to make tax-free contributions of up to $5,250 per year toward their employees’ student loans. This benefit was extended through December 31, 2025, by the Consolidated Appropriations Act, 2021.
2. How It Works: Employers can make direct payments to the student loan servicer or provide reimbursements to the employee for their loan payments. The exact terms and conditions vary by employer.
3. Attraction and Retention Tool: Offering student loan repayment assistance can help employers attract and retain talent, especially younger employees who are more likely to have student debt.
4. Program Variations: The specifics of these programs can vary widely. Some employers may offer a fixed monthly payment, while others might provide a lump sum annually.
If you’re looking for a job or are currently employed, it’s worth checking if this benefit is available. You can usually find this information in the company’s benefits package details or by asking the HR department.
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