Employers can pay your student loans — why many don’t and why that could change
Employers can help staff pay down student debt, and there’s an increasing variety of ways they can do it as more tax incentives take effect and catch attention.
There are more than 43 million borrowers who have amassed over $1.6 trillion in student loan debt. The payments, interest and collections on federal student loans have been frozen since March 2020. Assistance took a variety of forms: 401 contributions while the employee paid off student loans, student loan reimbursement and debt counseling.
Job-based repayment assistance is one part of the way to address the problems with student loans and higher education, Taylor said. “If we are working together to address college affordability as a whole, that will include employers,” she said. Going into 2020, Copeland at EBRI said “it looked like there was a lot of excitement and intent to offer” student loan repayment benefits as a way employers could distinguish themselves.Then-President Donald Trump allowed the first payment pause in March 2020. Congress passed the $2.2 trillion CARES Act later that month. It was the sweeping pandemic relief package which authorized the first round of stimulus checks, supplemental jobless benefits and forgivable business loans.
Considering the payment pause and the puzzle of other workplace benefits and working setups to navigate during the pandemic, “it turned the focus away” for employers, Copeland said.The tax code change is a “great retention tool,” but it needs more use, Sen. Mark Warner, a Democrat from Virginia and one of the expanded tax incentive’s original backers, said last week at a budget hearing for the IRS.
The IRS did not have information available on the number of taxpayers or businesses relying on the exclusion for student loan payments, a spokesman noted.
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