In August, the IRS issued a groundbreaking ruling that could affect the tax treatment of employers’ student loan repayment contributions. We can help you understand what the ruling means, how to explain it to your stakeholders, and how companies can act on it to offer a differentiated benefit before their competitors do.
Making payments towards employees student loans via payroll deduction: is it a convenience or does it come with a cost? As several vendors have begun requiring employees to make their minimum monthly student loan payment via payroll deduction as a requirement of Student Loan Assistance Programs, companies may look at this as an added perk that will help employees. What some fail to understand, however, is that they may actually be putting employees at a disadvantage if they choose to administer their program this way.
As more Americans flock to colleges and universities against a backdrop of rising tuition costs, it is increasingly clear that we are in the midst of a student loan crisis. The proliferation of high-cost student loans outpaces both inflation and wage growth, and delinquency rates are now higher than ever before, surpassing all other mainstream credit products. In total, there is $1.45 trillion in student loan debt in the U.S., and it grows by $2,700 every second. Over 44 million Americans currently hold student loan debt.
School is ending for the class of 2018, and employers across the nation are getting ready to welcome them into the workforce. For some of these new grads, this is when their parents take a first step back and let them stand on their own two feet.
As these new grads’ employer, not only are you responsible for helping them start successful careers; you’re oftentimes helping them start their independent lives. This is a huge privilege and responsibility! To help smooth the transition for these new professionals, consider these six things:
I recently got my hands on the latest Aflac WorkForces Report (AWR), and it is chock full of valuable insights about how employees and employers view the benefits offered in today’s market. The full report has great insights on benefits trends and attitudes, but here we’ve highlighted the top points below as it relates to hiring and retaining employee talent, and how the right benefits package can help.
If your company is considering student loan refinancing, you should take a hard look at how a comprehensive Student Loan Assistance program differs from student loan refinancing on its own.
We're all familiar with the old offer, "work for us for 2 years and we'll help pay for you to earn a college degree". Employers have been offering these programs for quite some time, but increasingly the value of such programs are being called into question. The common challenges that employers site when assessing the effectiveness the of their tuition reimbursement programs are:
Employer-sponsored student loan repayment programs are growing quickly as was highlighted in an October article published by the Society for Human Resources Management (SHRM).
Interested in taking the perfect benefits package proposal to your executive team and walking away with unanimous approval?
Research continues to show that student debt is delaying the American Dream. For employers, the opportunity to engage Millennial talent with a meaningful benefit that addresses their interests, has never been so real.
Employee Benefit News (EBN) recently reported on the successful deployment of student loan assistance at Rise Interactive. Rise is an award winning digital marketing agency and Nicole Skaluba is the company's head of people.
I recently had the honor of leading a session at the EBN Benefits Forum & Expo along with Nicole Skaluba, head of People at Rise Interactive.
In over two years of designing student loan assistance programs, we've found that employers consistently ask 3 questions while trying to decide if they should offer student loan assistance as an employee benefit.
Our plan design process leverages data-driven analysis along with insights from our work supporting top employers to help management teams and their advisors efficiently design student loan assistance programs that support their organization's talent goals, leverage best practices, and deploy capital in an efficient way.
For most employers there is no need to implement a holding period. Student Loan Assistance is a strong recruiting tool, and the impact is maximized if newly hired employees start receiving employer contributions from day 1.
There are of course exceptions to the rule...
Good news: employer-sponsored student loan repayment contributions are tax deductible. The easy way to think of student loan repayment is to consider it like compensation.
That means employers can deduct their contributions as a business expense like they do with salary and wages.
It also means that employers will record Student Loan Repayment on payroll as Imputed Income.
While this may seem like a value-add service to some, the reality is that your employees don't need this, it creates unnecessary complexity for your program, and in some cases may introduce financial liability. Though technicially possible, we advise employers do not process employee payments via payroll deduction.
Clawback provisions are common with tuition reimbursement so this question comes up a lot. Because of some key differences in how we administer student loan repayment, there is usually not a need to have this type of provision attached to your program.
UPDATE: Based on an IRS letter released August 2018 there is now additional plan design flexibility available for employers seeking to offer offer Student Loan Repayment in coordination with a retirement plan. Click Get Started below to discuss your Student Loan Mirroring plan design goals and options with a member of the Peanut Butter Client Solutions team.
Student debt is causing quite a bit of financial stress for employees today, but research from Aon Hewitt suggests the pain of student debt will likely be felt all the way into retirement. According to their research workers with student loans are participating in employer-provided retirement plans at a lower rate than those without loans, and employees with loans are far more pessimistic about their financial future than those without loans.
We have a student loan repayment plan design option that can address both the pain of student loans while also helping employees plan for the future.