CARES Act allows employers to contribute to student loans tax-free

As we enter an era of economic uncertainty, the burden of student debt becomes even more crippling for borrowers.

And the immediate need for college-educated workers becomes even more dire.

In today’s economy, Student Loan Repayment can be especially impactful for:

Employers of essential workers
 
  • 30% of those employed in Health Care hold student debt
 

 

Employers of the highly educated and highly indebted

 

  • 34% of those employed in Education hold student debt ($49.3K average)

 

Employers of the highly educated and highly indebted

 

  • 34% of those employed in Education hold student debt ($49.3K average)

 

Employers that have downsized and need to retain critical staff

 

  • 26% of those employed in the U.S. Workforce hold student debt
 
As U.S. employers prepare to return from quarantine and ramp-up operations, it will be even more important to deliver the incentives that matter to the workers they need.

 

Student Loan Assistance helps employers stand-out.

Student Loan Resources

Give employees the tools they need to tackle their student loan debt

Student Loan Repayment

Provide loan contributions to improve hiring and retention of talent

Companies offering Student Loan Repayment may see…

%

faster hires

%

longer tenure

Some of the folks we’re happy to work with

Top employers like these already offer Student Loan Repayment to attract, retain and engage their valued talent.

 

 Times are rough.

 

Let’s work our way forward together.

Student Loan Repayment can now be offered tax-free.

The CARES Act allows employers to contribute to student loans tax-free.

  • Employers can make contributions to student loans through a Section 127 Educational Assistance Plan, and thereby…
  • …exclude those contributions from employees’ gross income up to a maximum of $5,250 per year for payments recorded on payroll up to and including December 31, 2020.

Employers may begin offering Student Loan Assistance in a few simple steps:

Setup your company’s
Student Loan Assistance program
Incorporate Student Loan Repayment
into a Section 127 plan

(optional)

Initiate enrollment online
through Peanut Butter

By offering Student Loan Repayment tax-free, employers will…

Make a greater impact on employees’ financial futures

Since State and Federal income taxes no longer need to be withheld for contributions; a tax savings of about $0.30/dollar goes directly to the employee’s bank account.

Save on payroll taxes

Since your company no longer needs to withhold FICA, FUTA, SUTA for contributions; a tax savings of about $0.10/dollar stays on the company’s balance sheet and improves earnings.

Need to comply with Section 127 requirements from the IRS

All Peanut Butter clients will receive a sample amendment to a 127 plan or a sample 127 plan document that their lawyer can review & approve.

 

 

Hire faster and retain talent longer.