Businesses are getting an extra incentive to help employees out with their student loans.
The latest stimulus package allows employers to make tax-free contributions of up to $5,250 a year towards their employees’ student loans.
Companies can take advantage of the tax benefit through the end of 2025, but one student loan expert says he expects the benefit could soon become permanent.
“The benefit of making it permanent is there are some employers who are still sitting on the fence with regard to offering this benefit because they don't want to offer the benefit and then have to stop offering it if Congress doesn't extend it,” said student loan expert Mark Kantrowitz.
In 2018, 8% of companies were offering student loan repayment benefits to their employees, according to a survey from the Society for Human Resource Management. Most of the businesses who offered the benefit were larger companies.
Kantrowitz says that’s because the companies that facilitate those benefits get paid per participant, so it’s more expensive to offer the benefit to a small number of employees who wouldn’t have as many people participating.
For those who work for a company that does not offer student loan repayment as a benefit, Kantrowitz suggests reaching out to human resources.
“If enough employees ask HR to add this benefit, they'll seriously consider adding it, because they want to not just address the needs of their employees but also to show that they care about the same thing that their employees care about,” he said.
Federal student loan payments are currently paused through the end of the month, but employers can still make contributions that will go entirely to the principal on those loans.