SAN FRANCISCO – (BUSINESS WIREWell, a leading administrator of student loan repayment benefits, today applauded Congress for granting a five-year extension to a temporary tax exemption that allows employers to pay up to $ 5,250 per year for each employee’s student debt on a tax-free basis.
Similar to a 401 (k) match, the provision allows employers to pay off their student loan debt without taxing employer contributions. Originally included as part of the CARES Act, this tax exemption would expire on December 31, 2020. Lawmakers have now extended that deadline to December 31, 2025 with the passing of the new economic stimulus law.
“Employer-sponsored student loan repayment is one of the most important and innovative benefits employers can provide,” said Gregory Poulin, CEO of Goodly. “Allowing employers to repay their employees’ pre-tax student loans is a win-win situation. Since the enactment of this legislation, we have seen a significant increase in demand from employers looking to implement student loan repayment as an employee benefits program. Using pre-tax employer payments, the average employee using Goodly can pay off their student loans about 30% faster than they would otherwise – demonstrating the strength of this legislation and the college benefits as a whole. ”
The newly adopted statute extends the tax credit for student loan repayment programs by 5 years. Before the CARES Act was passed, both employees and employers faced tax liabilities when participating in employer-funded student loan repayment benefits. Since the enactment of the CARES Act, employers have been able to pay tax-free contributions of up to $ 5,250 per employee per year to the employee’s student debt without increasing the employee’s gross taxable income.
Goodly is a leading provider of employer-sponsored student loan contributions and 529 college savings accounts. Similar to a 401 (k) match, Goodly’s turnkey solution provides employers with a single platform to automate regular pre-tax employee student loan payments. Companies offering Goodly are able to better attract and retain top talent by providing meaningful benefits that support and engage employees. For more information, please visit www.goodlyapp.com or follow up on Goodly LinkedIn.