There are a variety of possible organizational frameworks for corporate programs. They may make one-time or recurrent payments to employee or student debt servicers.
Examples of Employee Loan Repayment Programs
Depending on your company, you may be eligible for a variety of benefits, including the following:
Gain upon signing: When you initially start working for a firm, some will give you a lump sum as a signing bonus.
Payments that occur regularly: If you use a service like Gradifi, your employer can directly pay your lender. Payments can be made on a regular schedule, such as monthly, yearly, or at some other time. After a certain number of years with the company, you may be eligible for a lump sum payment. Your company may contribute to your loan repayment by including a predetermined amount in your salary.
Debt Repayment Aid Program
If you are an armed forces member or your profession makes you eligible for a government agency's debt repayment aid program, you will normally receive annual installments or a lump sum payment after you have provided the required service and met other program requirements.
Employer retirement contributions are often proportional to the employee's retirement savings. On the other hand, some companies will give retirement savings contributions in exchange for employees who agree to devote a portion of their salary to paying down their student loan debt.
How taxation on employer-provided student loan repayments works
For a long time, employers were required to withhold payroll taxes from employee loan repayment aid payments because they were deemed taxable income. As part of the relief granted in the wake of the coronavirus epidemic, the CARES Act was passed in March 2020, allowing companies to contribute up to $5,250 a year toward their employees' student loan repayments without incurring any tax liability. With the passage of the Consolidated Appropriations Act, the tax credit has been extended to the year 2025.
Essential Qualifications To Meet
After an employee completes their education, their employer may reimburse them up to a predetermined amount through a tuition aid program. Courses must typically pertain to your employer's industry or job duties to be eligible for reimbursement. Unlike student loan repayment programs, which typically aim to improve their participants' financial well-being, these initiatives focus on the growth and development of existing staff.
Benefits for paying back student loans through your work and how to access them
Some private employers require their employees to be on staff for a minimum before they are eligible for student loan repayment benefits. It's a perk that some companies include right off the bat.
If your current place of employment does not provide this perk, you may want to broach the topic with the head of HR. Focus on how this will help the business. For instance, if an employer contributes up to $5,250 toward an employee's student loan debt, the contribution is not subject to taxation. Also, attracting, motivating, and keeping staff might be easier if you offered these perks.
Programs that help with debt payback
Alternatively, your professional path may qualify you for student debt repayment help programs offered by a federal or state government agency. Loan repayment programs may be available to people working in certain fields, such as healthcare, public defense, the armed forces, and STEM. Find out whether there is a government program for people in your line of work and if you qualify by doing some digging.
Which businesses accept repayment of student loans?
As more and more private organizations introduce initiatives to help borrowers pay off their student loans, compiling an exhaustive list of such initiatives is a formidable task.
Only 8 percent of companies in 2019 offered a student loan repayment benefit, per the Society for Human Resource Management. The Employee Benefit Research Institute estimates that by 2021, this number will have risen to 17%, with 31% of companies planning to provide it in the future.
In conclusion
Employer-provided student loan repayment benefits are gaining ground. Employers who offer student loan repayment to their employees can do so tax-free through 2025 thanks to the Consolidated Appropriations Act of 2021.
If paying off your student loans is your concern while job hunting, it is in your best interest to look for a company that provides this service. If you already work for an organization that provides this perk, you should familiarize yourself with its inner workings to reap its full benefits. Not taking advantage of help paying back student loans would be bad.
