How Employers Can Help With Employees’ Student Loan Repayments | CPT PPP Coverage

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What types of student loan benefits exist for employees, and how can HR departments best implement them? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Will Sealy, CEO/Co-Founder at Summer, on Quora:

There are a number of options for employers looking to help out their employees with student loan repayments.

Option 1: Take advantage of the CARES Act

In 2020, as the pandemic began to force many Americans out of work, the U.S. government passed the CARES Act, including a potential game changer for employees and employers alike: employers could now help their employees pay down their student loans through tax-free contributions. This legislation was extended for five years, giving employers the opportunity to leverage this program through at least 2025.

The beauty of this new benefit is that it’s fairly straightforward for the employer to implement, and provides a huge impact for each employee with loans. Through this program, employers can contribute up to $5,250 tax-free to employees’ student loan payments annually, which comes to just about $437 per month. With an average student loan payment of $393, this program could significantly boost an employee’s monthly payment and speed up their path to becoming debt free. This program applies to any loan that is considered a “qualified education loan” by the IRS, regardless of whether they’re privately held or federal.

Option 2: Start preparing for Secure 2.0

In 2022, in the Omnibus Spending Bill, the U.S. government passed a measure that will allow employers to make tax-favorable matching contributions to employee retirement plans based on the amount of employees’ monthly student loan payments, beginning in 2024.

While student loan repayments can’t exceed the maximum deferral limits under the Internal Revenue Code (IRC), this program will still make a huge dent in helping to eliminate what we refer to as a double-detriment situation where employees are unable to prepare for the future while still paying down their debt.

HR departments have time to prepare to implement this measure ahead of 2024, with an excellent first step being to reach out to your record keeper to discuss with them what these changes will mean for you as an employer.

This question originally appeared on Quora – the place to gain and share knowledge, empowering people to learn from others and better understand the world.