You may not know this, but you may be eligible for employer assistance to pay off has given. Employers who help their employees reduce education loan debt receive tax incentives and other benefits thanks to recent federal government relief measures.
Due to the passing of the CARES Act and extra legislation to increase relief, millions of Americans can now get help from their employers to pay for down their student loan debt. And for individuals whose employers aren’t interested in helping, you may still find other options to save cash in your student loans.
Pandemic relief efforts and student loans
Student loans haven’t necessarily been at the forefront of relief efforts throughout the pandemic. Relief packages to date have been focused on helping businesses and becoming stimulus checks at the disposal of Americans. That doesn’t mean, however, that the huge numbers of people currently paying down student loan debt have been ignored.
Since Congress signed the CARES Act into law on March 27, 2022, federal education loan payments are paused temporarily. The federal government also stopped collecting on defaulted student loans and lowered rates of interest to 0%. By January 2022, these emergency relief work is now extended through September 30, 2022.
Employer assistance with the CARES Act
Another way that American borrowers received potential student loan relief is thru employer assistance programs. Under the CARES Act, there’s a tax incentive for employers who provide assistance to employees with education loan repayment.
Through the CARES Act, employers can make tax-free payments on student loans as much as $5,250 per employee each year. Even better, this benefit extends to any qualifying educational loan, including private student education loans. Qualifying employer loan repayments does apply towards either your loan principal or interest. Payments may also be paid directly to the borrowed funds servicer or provided to the employee to help make the payment.
The provision incentivizes employer education loan repayment by exempting the benefit from payroll taxes, much like employer-paid health insurance. Originally slated to finish December 31, 2022, employer assistance benefits were recently extended by Congress through December 31, 2025.
How to obtain your employer to pay student loans
The relief legislation doesn’t offer an official program or blueprint for employers to provide student loan assistance. Participation isn’t required, as well as your employer might not know this benefit exists. The best choice is to contact your company’s hr department to determine if there’s an existing assistance program or maybe they’d be willing to provide assistance.
How education loan repayment assistance benefits your employer
As mentioned, employers receive tax benefits if you are paying down your loans. How does this work? Initially, this benefit applied only to employers who helped purchase educational expenses so employees could finish school. The CARES Act expanded the advantage to include student loan payments.
Employers are eligible to supply up to $5,250 annually towards education loan repayment. The employer can exclude the total amount provided in the employee’s wages. The tax break is comparable to what goes on with employer-paid health insurance. If employer assistance exceeds $5,250 for that year, they must report the surplus value as employee wages.
While getting a tax break is great, the actual value for employers might be a better shot at attracting the very best job candidates. According to an employee benefits survey through the Society for Human Resource Management, only 8% of employers offered a student loan assistance program for their employees. For college graduates finishing school with significant student loan debt, finding a company prepared to assist in paying off debt is a huge draw.
Also, companies now have 5 years to implement this program, with the chance of it being extended permanently.
Details you need to know about employer assistance relief
Hidden within the small print of this tax exclusion is the fact that employers possess the option to give employees money to make student loan payments or send payments directly to the lending company.
This may not matter for you, but if you are pursuing Public Service Loan Forgiveness, none of your employer’s direct payments to some loan servicer count for the program’s requirements. As your loan debt will eventually be completely repaid tax-free, getting employer assistance isn’t worth as much as it's with other borrowers.
Also, employers could use a student loan assistance program as part of their compensation package rather than using those funds to raise employee wages, which will continue after your loans are repaid. Reliance upon a repayment assistance program also ties you to definitely an employer for an extended time. Should you leave the company before maxing out loan repayment benefits, you can wind up leaving much-needed assistance on the table.
Examples of employer assistance programs
Student loan repayment assistance programs existed before the federal government started providing tax breaks to companies. While some employers choose to help pay education costs for employees currently enrolled in school, others have set up programs to assist repay existing student loan debt.
Not all employers structure their programs the same way. You might receive assistance in a number of ways. Some companies provide assistance through monthly obligations. Office supply chain, Staples gives its employees $100 assistance monthly for approximately Three years. Penguin Random House Publishing also provides $100 monthly assistance, but as much as $9,000 for approximately seven and half years.
Fidelity Investments implemented the Step Ahead Education loan assistance program to assist employees reduce debt. Employees who’ve worked a minimum of 6 months in the company can receive $2,000 each year towards their student education loans, up to $10,000 total.
Other employers provide assistance by offering to match your student loan payments. Insurance provider Aetna matches payments for full-time employees up to $2,000 annually ($10,000 total max) and $1,000 annually ($5,000 total max) for part-time employees. In case your employer makes payments like a match, attempt to max out matching payments since it’s free money to pay down your debt.
What are you able to do if your employer doesn’t participate?
While the relief efforts mentioned previously benefit your employer, they aren’t necessary to participate. Unfortunately, in case your employer isn’t on board with providing assistance, you can’t force them to help.
But, one surefire way to lower your education loan debts are by refinancing has given. You could be eligible for a a refinance loan having a lower interest rate than your current loan. Doing this can lead to considerable savings in interest payments over the life of the loan. Use MU30’s education loan refinance calculator below to estimate your potential savings.
When you refinance student education loans, the lender takes care of your old loan, and you get an entirely new loan with a brand new rate of interest and terms. You are able to refinance federal student loans and loans. Refinancing federal student education loans means you’ll lose access to federal loan forgiveness programs, repayment plans, along with other protective benefits.
There are many things to consider when deciding should you refinance your student loans, much like your credit score, debt-to-income ratio, and how much debt you’re carrying.
There are some education loan refinance possibilities, including an online marketplace that allows you to check rates from multiple top lenders in one spot. Plus, checking rates doesn’t hurt your credit rating. The procedure takes minutes and gives you an concept of what your location is and also the kind of rates available, for refinancing.
is another excellent spot to check rates of interest for student loan refinancing with several lenders at once. It’s free of charge and only requires completing a brief form to receive multiple quotes from lenders that suit your needs.
And in case your credit rating isn’t right with lending standards, you might still be eligible for a education loan refinancing through Upstart. I love the peer-to-peer lending platform simply because they take a look at additional factors besides your credit when determining eligibility. You may still find several requirements you’ll have to meet, but Upstart makes it much simpler to qualify for student loan refinancing.
Student loan debt is no doubt a financial burden. Take advantage of loan repayment assistance programs if offered by your employer. Otherwise, loan forgiveness programs or refinancing can ease the responsibility if you can qualify.