The latest stimulus bill passed into law includes an extension on tax-free payments by employers to pay down employee student loan debt. This provision originally set by the CARES Act was due to expire on December 31, 2020, but last month’s passing of the Consolidated Appropriations Act, 2021 extends the benefit until December 31, 2025.
Student Loan Payments Resume Next Month
This act did not include an extension on CARES Act’s student loan payment relief. This means federal student loan borrowers will resume payment beginning February 1. This presents an opportunity for employers to help their workforce reduce their student loan debt by offering tax-free contributions.
Employers Can Build a Customized Benefit
This contribution benefit allows employers to make tax-free payments up to $5,250/employee each year. Employees can apply the contributions to the federal and private loans of their choice. It also will result in employees to save on their federal income taxes. Employers have flexibility in how to implement this benefit, including offering fixed, matching, one-time, or recurring contributions.
Senator Mark Warner (D-VA), who introduced the Employer Participation in Repayment Act in 2019, said “This is a win for both graduates and employers. By extending this provision, employer will have the ability to continue to recruit and retain a talented workforce while also helping working Americans manage their financial future through and after COVID-19.”
Contact IonTuition today if your organization is interested in providing student loan contributions.