The National Law Review (NLR) recently published its guidelines to help employers steer clear of legal obstacles some have encountered with student loan repayment and tuition reimbursement programs. The three key legal considerations for student loan assistance programs include:
- Formalizing the terms and conditions of any tuition assistance program in writing.
- Looking for tax caps since after the Consolidated Appropriations Act, Congress expanded Section 127 of the IRS code to allow employers to offer up to $5,250 in student loan repayment benefits tax-free through 2025. Be mindful that tuition assistance benefits that exceed $5,250 annually are considered wages, subject to federal income and payroll tax withholding.
- If a benefit plan anticipates an employee having to repay the benefit, you may need special considerations to account for the Truth in Lending Act (TILA) and debt collection laws such as the Fair Debt Collection Practices Act. Be mindful that Income-Share Agreements (ISA) are considered “credit” under TILA, and that you should check state laws before requiring a non-compete agreement or repayment requirement.
Peanut Butter supports employers by providing a sample plan document, insights on program best practices, and support through our customer success team. Our Student Loan Repayment and Student Loan Resources are designed to help you avoid such pitfalls.
Check out the full article by the National Law Review here.