admin The Senate’s recommended $2 trillion stimulus bill includes a tax break for student loan payments made by employers.
An increasing number of huge companies have been offering to pay down part of the student loan balances for employees and new sing ups. For instance, PricewaterhouseCoopers last year announced that it had paid $25 million toward the student loan debt of employees. The auditing and professional services company offers $1,200 in loan repayment per year for up to six years for its associates and senior associates.
Experts in the employer college tuition and loan benefits space which estimated to include more than $20 billion in annual spending by the employers that have said a tax incentive could dramatically expand such programs. The 619-page stimulus bill would move in this direction.
Section 2206 of the proposal would exclude from taxation any payment made this year, “by an employer, whether paid to the employee or to a lender, of principal or interest on any qualified education loan incurred by the employee for education of the employee.”
Criticizing the provision was Jason Delisle, a resident fellow at the American Enterprise Institute.
“It gives employers a big incentive to set up loan repayment plans under which they will effectively pay employees who have student loans more than employees who don’t,” Delisle said on Twitter. “That doesn’t make sense. The reasons people have student debt are varied, the debt is not a proxy for hardship.”
Sara VanWagoner is vice president of corporate growth for Edcor, one of the larger players in the employer benefits’ field. A non-taxable benefit for student loan assistance benefits payments would be a “huge win” for both employers and employees she added. “Employers will be more open to offering the benefit, allowing for improved recruitment, retention and diversity initiatives,” VanWagoner said via email. “Employees can pay down their student debt even faster, without the burden of paying additional taxes on the benefit dollars.”
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