Number of the Day Shows Student Loan Benefit May Stick
Our take on the most relevant or interesting figure in personal finance today
That's how many more years employers can pay up to $5,250 of their employees' student loans per year tax-free, thanks to the new stimulus package.
Employers can receive the tax exemption annually through 2025 when they provide educational assistance benefits to employees. Prior to the pandemic, companies could help pay for workers’ educational expenses, like tuition or books, with up to $5,250 exempt from both employer and employee taxes, but student loans were not included. That changed in March 2020 when the CARES Act was enacted.
This tax exemption that was part of the CARES Act was slated to expire at the end of last year. However, the latest stimulus bill, which President Donald Trump signed into law on Dec. 27, extends it for five years, with a new expiration date of Jan. 1, 2026.
“We’ve seen a significant increase in demand from employers looking to implement student loan repayment as an employee benefit program,” Gregory Poulin, CEO of student loan employee benefits company Goodly, said in a statement last week. “Allowing employers to repay their employees’ student loans on a pre-tax basis is a win-win.”