The CARES Act and Student Loan Repayment Benefits

Did you know the CARES Act has provisions that impact student loans?

• Extends the tax benefits of Tuition Reimbursement programs under IRS Section 127 Education
Assistance Programs
• Payments by an employer to student loans are not included in an employee’s income
• Up to $5,250 is eligible
• Applies to payments made between 3/28/2020-12/31/2020
• Covers principal and interest
• Federal student loan automatic monthly payments are suspended through 9/30/2020
• Interest on federal student loans is 0% through 9/30/2020
• Any manual payments to federal student loans through 9/30/2020 will go to principal only
• Any missed payments under the CARES Act will still qualify as a payment under the PSLF Program

Student Loan Repayment Benefit Plans are one of the fastest growing employer benefits

• Number of employers offering this benefit increased 100% from 2018-2019¹
• Student loan repayment plan is the most requested financial benefit²
• Outstanding student loan debt has tripled in 12 years from 2007 to 2019³
• Average student loan debt balance is $37,172⁴
• 1 in 4 Americans have student loan debt⁵

Types of Student Loan Repayment Benefits Plans Available

• Direct Pay – Employer makes payments to a student loan provider for a fixed amount (monthly)
• Employer Matching – Company makes a matching contribution to retirement plan for employees
making student loan payments unable to contribute to the retirement plan (Abbott Labs example)
• FlexMatch – Gives employees the flexibility to use company matching dollars towards paying
down student loan debt or being traditionally matched in their retirement plan

SRP can help with the administration of Student Loan Benefit Plans.
Contact your local SRP Managing Director to learn more!

 

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advisory services are offered through Global Retirement Partners, an SEC Registered Investment Advisor. Global Retirement Partners and Strategic Retirement Partners (SRP) are separate entities from LPL Financial.
Global Retirement Partners employs (or contracts with) individuals who may be (1) registered representatives of LPL Financial and investment adviser representatives of Global Retirement Partners; or (2) solely investment adviser representatives of Global Retirement Partners. Although all personnel operate their businesses under the name Strategic Retirement Partners (SRP), they are each possibly subject to differing obligations and limitations and may be able to provide differing products or services.

Sources:

¹https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Documents/SHRM%20Employee%20Benefits%202019%20Executive%20Summary.pdf;

²https://www.benefitspro.com/2018/05/07/student-loan-benefits-more-popular-with-workers-th/ and https://blog.accessperks.com/2018-employeebenefits-perks-statistics#engagement;

³https://www.valuepenguin.com/average-student-loan-debt and https://www.studentloanplanner.com/student-loan-debtstatistics-average-student-loan-debt/;

⁴https://www.nitrocollege.com/research/average-student-loan-debt;

⁵https://www.thebalance.com/student-loan-debtstatistics-4173224