Remember that nagging student loan you tucked away during the COVID-19 moratorium? As the time to resume payments on federal student loans looms, there is an ally you might have overlooked: Your employer.
Sure, you might know them as the people who sign your paychecks. But did you know they could help you knock down those student loan figures too? Let’s dive in.
The IRS, Your Boss, and Your Student Loan: A Thrilling Love Triangle
Picture this: you are at your desk, sipping your morning coffee, when you get an email. No, it is not another newsletter or a calendar reminder. It is the IRS. Before you panic, though, understand this: it is not a warning, but rather an exciting reminder.
The IRS is putting the word out: Employers, you have a superpower when it comes to your employees’ education and student loans. This is not about them turning into fairy godmothers or wielding magic wands. Instead, it is about leveraging a fantastic tax benefit that has been, quite frankly, underutilized for years.
Your Employer Can Offer You Up to $5,250
Let’s talk numbers. $5,250 might not sound like a down payment for a mansion, but when it is a tax-free contribution towards your education or student loan, it is downright regal.
Here is the deal: employers can offer up to $5,250 tax-free each year to assist with their employees’ education expenses. That is money you can use for tuition, fees, principal, and interest on both federal and private student loans.
Now, if you are thinking, “But what if my super-generous employer wants to give more?” Any amount over that sweet $5,250 will be considered taxable income. But hey, getting tax-free help with the first chunk? That is a game-changer.
Old Benefit, New Tricks
While the concept of employers helping with educational expenses is not groundbreaking, the addition of student loans to the mix is the fresh twist we all need. Since the pandemic took hold in March 2020, lawmakers, understanding the immense financial burden on many, decided to jazz up this benefit.
Enter the student loan angle, and suddenly, the employer educational assistance benefit became the hottest topic around virtual water coolers.
What is in It for Employers?
At this point, you might be wondering, “Why would my employer want to chip in?” Here is the scoop: Aside from the feel-good factor and boosting morale, employers have a vested interest in a well-educated workforce. It can lead to better job performance, increased innovation, and even higher retention rates.
Plus, with the added benefit of helping with student loans, they are directly addressing a pressing concern for many workers, building loyalty in the process.
Time to Make a Move
Ready to jump on this golden opportunity? It might be worth having a chat with your HR department. While not all companies will have such programs in place, you never know until you ask.
And, if they are unaware of this stellar benefit, you just might become the office hero for introducing it. Remember, the provision expires on December 31, 2025. So, better be quick and get rid of those looming student loans.