SAN FRANCISCO–(BUSINESS WIRE)–Goodly, a leading student loan repayment benefit administrator, today applauded Congress for granting a five-year extension to a temporary tax exemption that allows employers to pay up to $5,250 annually toward each employee’s student debt on a tax-free basis.
Similar to a 401(k) match, the provision allows employers to help pay down their employees’ student loan debt without employer contributions being taxed. Originally included as part of the CARES Act, this tax exemption was set to expire on December 31, 2020. Lawmakers have now extended that deadline through December 31, 2025 with the passage of the new economic stimulus bill.
“Employer-sponsored student loan repayment is one of the most important and innovative benefits employers can offer,” said Gregory Poulin, Goodly’s CEO. “Allowing employers to repay their employees’ student loans on a pre-tax basis is a win-win. Since the enactment of this legislation, we’ve seen a significant increase in demand from employers looking to implement student loan repayment as an employee benefit program. With the help of pre-tax employer payments, the average employee using Goodly can pay off their student loans about 30% faster than they otherwise would – demonstrating the power of this legislation and student loan benefits as a whole.”
The newly enacted statute will extend the tax relief for student loan repayment benefit programs for 5 years. Prior to the passage of the CARES Act, both employees and employers faced tax obligations when participating in employer-funded student loan repayment benefits. Since the enactment of the CARES Act, employers have been able to make tax-free contributions of up to $5,250 per employee annually toward employee student debt without raising the employee’s gross taxable income.
Goodly is a leading provider of employer-sponsored contributions to student loans and 529 college savings plan accounts. Similar to a 401(k) match, Goodly’s turnkey solution gives employers a single platform to automate regular contributions towards paying down employees’ student loans on a pre-tax basis. Companies that offer Goodly are able to better attract and retain top talent by providing meaningful benefits that support and engage employees. For more information, please visit www.goodlyapp.com or follow Goodly on LinkedIn.
Contacts
Gregory Poulin, greg@goodlyapp.com, 978-518-0704