Increasingly, individuals comprising today’s workforce are straddled with significant levels of student loan debt. At the same time, these workers are often conflicted as to whether they should focus on paying off their debt or set aside funds to pay for retirement. As an employer, adding a student loan repayment program to your employee benefit portfolio not only helps them address this dilemma, but also represents a tremendous opportunity to help attract and retain key talent.
To further benefit employers, the Coronavirus Aid, Relief and Economic Security Act (CARES ACT), passed in March of 2020, added a little-known provision regarding student loans. The provision allows an employer to make up to $5,250 in student loan payments for an employee within a year. Regardless of whether the payments go directly to the employee or to the student loan servicing entity, the money is considered tax-free to the employee and the employer is excluded from paying payroll taxes on the funds. As of this writing, the provision, originally set to expire at the end of 2020 has been extended through December, 2025.
By structuring the program as a part of your voluntary benefits package, you have the ability to customize the program according to your workplace demographics and budgetary capabilities.
Employers can utilize a variety of methods, including fixed contributions, matching contributions, consolidating loans or refinancing the loan. With these programs, the employer first decides how much, if any, they are willing to contribute into the program.
By creating a differentiated, unique benefit package that addresses a specific employee need, employers benefit by boosting employee engagement, increasing productivity levels, and improving employee retention rates.
The Columbia Montour Chamber of Commerce offers its members access to My Benefit Advisor as a solution for employee benefits, including voluntary offerings. For more information about My Benefit Advisor, visit our website at cmcc.mybenefitadvisor.com or contact Tanya Ruiz at (800) 377-3536.