The draft stimulus bill $ 2.2 zillion Congress is set to pass includes a tax once break this year by contributions from the annual employer up to $ 5,250 toward the debt of student loans of its employees. The arrangement is garnering both praise and criticism.

A growing number of mostly large companies have started loan payments offered by the student as a benefit for both existing employees and new employees.

A survey conducted last year by the International Foundation Benefit Plans Employees found that 4 percent of the 772 organizations that responded offer a plan of this type, with 2 percent in the process creation of one. Another 23 percent of employers, however, said they were considering such a benefit.

For example, PricewaterhouseCoopers announced last year that it had paid $ 25 million for student loan debt of employees. The auditing firm and professional services offered $ 1200 in payment of the loan year for up to six years for senior partners and associates.

A bill introduced last year by Sen. Mark Warner, a Democrat from Virginia, employer sought to free student loan benefits -Paid taxes. Companies that help manage such plans said the space would explode if the bill passed, with some saying all major employers would have to offer the benefit.

The 619-page stimulus bill of the Senate would do just that and seems to reflect Warner's proposal.

Section 2206 of the law exclude taxes of any payment made this year "by an employer, whether paid to the employee or a lender, principal or interest of any education qualified loan incurred by the employee for the the employee education. " Seems to be only in effect for 2020, while pulling back a tax is rarely an easy political move.

The probable benefit would be lucrative for student loan borrowers and employers, wrote Adam Looney, a senior fellow of economic studies at the Tax Policy Center of the Urban Institute and the Brookings Institution.

"Under the terms of the bill, employers could establish educational assistance programs, which currently allow employers to provide tuition assistance for courses taken by an employee, to provide up to $ 5,250 per year, per worker in free tax assistance for employees to pay student loans, "he wrote. "Instead of being treated as wages, payments would be excluded from income tax and payroll (both the employee as part of the employer)."

Among those applauding the provision was Scott Thompson, CEO of Tuition.io, working with businesses about the benefits of student loans paid by the employer.

"provide a tax subsidy for student loan repayment employer will not only benefit individual workers, which will help reduce a major drag on the global economy, and to recover from the COVID-19 print" he said in a statement. "Even if only temporary, this innovative legislation will allow large and small businesses to help working people in America make it through this historic crisis."

Looney, however, said support student loan borrowers who need gratification least.

Only borrowers with jobs will be able to receive it, obviously. He said most people do not work for an employer with benefits that are generous enough to loan payments offer the student, considering that only four out of 10 people with the work of the debt for an employer which is even willing to establish a game plan 401 (k).

In addition, employers that offer broad benefits tend to have workforces with higher incomes. Looney and he said the tax cuts will be more valuable for workers in the highest tax brackets.

"Beyond simply being regressive, the bill aims loan relief that need it least," he wrote. "Low-income, unemployed borrowers who can not make payments and default at high rates to get any relief. However, borrowers who are already making payments - at or above the annual level of $ 5,250 -. Get the full benefit "

The proposed tax break is bad policy on several levels, said Jason Delisle, a resident researcher at American Enterprise Institute. He said that the provision obviously is not intended to deal with people experiencing financial difficulties are due to the coronavirus.

"It rewards employers for employees who have student loans paid more in total compensation of employees who do not," he said in an email Delisle. "As a result, it also encourages people to assume the debt of the student, even when it is not needed - otherwise they will lose the opportunity to be able to pay for education pretax dollars, or through a benefit provided by the employer. "

Student debt will increase as a result of the provision, he predicted.

"Once again, the implicit message of the Congress is, unfortunately, in the eyes of the loan program, it is better to have a degree of expensive degree and be employed to have a degree low cost and fighting to pay, "Delisle said. "The first is the shower with loan forgiveness and tax cuts now, the latter is stuck paying every penny they paid him."

A different view came from Adrienne L. Way, CEO and owner of Edcor Data Services LLC, one of the most established players in the field of employer benefits. He said that a non-taxable benefit for the payment of benefits student loan assistance would be a victory for employers and employees.

She said the tax benefit could help employers of all sizes, partly because it would be easy to implement in the context of the stimulus provision and the bill would be effective in recruiting and retaining employees .

"This benefit allows smaller employers to compete for the best talent that often goes to large organizations with more lucrative benefits," Way said in a statement.

payment programs student loans are a new way, rarely offered a benefit. Camino said many employers had been waiting to see what would happen in Congress. The stimulus bill was what companies were waiting, said

"This is not just about paying off student loans .; assistance from the employer income support to free employee to put in a 401 (k) or save money for big purchases like a new home, "he said. "Above all, this benefit helps everyone who is employed pay your student debt, which ultimately is good for the economy. It also makes an excellent incentive for the unemployed to seek employers who offer this benefit. "

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