Three Facts Every Employer Should Know When Considering Student Loan Repayment Benefits in Educational Assistance Programs

Matthew Chiarello
Snell & Wilmer
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  1. Congress created a temporary employee benefit under the CARES Act that allows employers to contribute up to $5,250 per year against employee student loan repayments. These payments can be excluded from taxable income and are not subject to payroll tax.
  1. The student loan repayment benefit was set to expire until Congress pushed back the provision’s sunset date. As such, student loan payments made between March 27, 2020, and December 31, 2025, are eligible.
  1. To take advantage of this new employee benefit, employers must adopt a written policy and otherwise comply with the formal requirements of Code Section 127, which governs qualified educational assistance programs.

 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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