Posted on: May 13, 2022
With more than 44 million federal student loan borrowers, many college grads entering the workforce need help repaying their loan debt. Luckily, many of them will find there’s a benefit for that.
More companies are adopting student loan repayment assistance benefits today. Employers are trying to make their benefits packages more competitive to attract top talent and help employees thrive financially. With the average borrower owing nearly $37,000, it makes sense for any company to offer student loan assistance.
Finding the Impact
While it may be difficult to imagine how much of an impact this benefit can have for the average borrower, BenefitEd has a tool to estimate how much can be saved. Using our Student Loan Repayment Impact Calculator, borrowers can plug in their loan balance, rate, and term to determine how much they could save by taking advantage of this benefit.
For example, let’s say a borrower owes $37,000 with an interest rate of 5.5%, over a 10-year term. With a monthly employer contribution of $75, this borrower would save a total of $9,637 and pay their loans off two years earlier, thanks to employer-assisted repayment.
These employer contributions are also tax-free for both employees and employers. Section 2206 of the CARES Act made a temporary tax-free provision for employer-assisted repayment programs.
An employer can contribute up to $5,250 in student loan payments to an employee per year, and the money is considered tax-free. This means the employee doesn’t have to pay income taxes on up to $5,250 given through this benefit.
Benefits like Employer-Assisted Student Loan Repayment can save employees with oppressive student loans thousands of dollars, years of being in debt, and the contributions are tax-free! It’s time to take advantage of this benefit.