Here’s why now is the best time to contribute to the repayment of employee student debt.
In one of his first moves in the Oval Office, President Joe Biden signed an executive order extending the payment holiday for federal student loan borrowers until at least Oct. 1, 2021.
In March 2020, Congress initiated the CARES Act, including a reprieve on payments for borrowers of federal student loans; interest was set to 0% and a pause was put in place for the collection of defaulted federal student loans.
Before Biden’s executive action, the relief was set to expire on Jan. 31, 2020.
For employers looking to attract, retain and engage highly skilled workers this year, a Student Loan Repayment benefit might be the golden ticket. Right now is a unique opportunity for employers of all sizes and industries to step up and make a difference in the lives of their team members.
Our programs have always required that borrowers make at least the minimum monthly payment directly to their loan servicer in order to qualify for employer-sponsored Student Loan Repayment. When the minimum payment is $0, the borrower/employee meets their participation requirement without doing anything. Even better, when the minimum payment is $0, a company’s contributions actually become more valuable, as it is more likely to reduce the principal balance thereby saving the borrower on compounded future interest costs!
Companies offering Student Loan Repayment in 2021 should be prepared to see faster hiring timelines, longer employee tenure, greater diversity, increased employee engagement, and are now able to record those contributions as tax-free under a Section 127 educational assistance plan.
If you’d like to set up a Student Loan Assistance program for your company, click here to Pick a Plan.