According to a recent article by Fortune, student loan payment programs are the latest trend in recruitment tools for many top companies. This is coming in response to the $1.2 trillion student loan crisis in America. Many top companies are finding that their employees are not taking part in employer sponsored retirement programs, and are instead directing any money they would contribute to their retirement to help pay down their student loans. This trend is most commonly seen among millennial employees, the generation suffering most from the student loan crisis.
Employer Student Loan Program for Employees
In an effort to attract top millennial talent to their companies, some employers are setting up programs that will provide payments on their employee’s student loans. Companies are seeing this as an innovative benefit that they can provide, hoping that it will set them apart among other employers. While the figure is growing, currently only 3% of employers offer a student loan assistance program of this nature.
The major hold-up in this policy becoming more widespread is the fact that the current tax code does not cooperate with this policy. The payments an employer makes on the employee’s loans are taxable as income to the employee. This dilutes the positive effect that these repayment plans can have in a drastic way.
Major companies are frustrated with the tax implications of these repayment programs. They feel that they are doing their part to combat the $1.2 trillion student loan problem in America, but that the tax code is holding them back. In light of that, a bill has recently been introduced to Congress that would extend the tax benefits of employer-provided tuition assistance to employer-provided student loan assistance. The bill proposes a tax exclusion that would greatly increase the benefit that these employer student loan contribution programs can have.
If you are not lucky enough to work for one of the 3% of employers offering a student loan assistance program, and are looking for relief give McCarthy Law PLC a call at(855)-976-5777 for a FREE consultation to see how we can help you.
Kevin Fallon McCarthy
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