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The CARES Act and student loans: What does it mean for employers and employees?

In a nutshell: As an employer, you can now contribute up to $5,250 tax-exempt dollars toward your employees’ student debt balances.

What should Employers do?

The provision enables employers to provide a student loan repayment benefit to employees on a tax-free basis. Under the provision, an employer may contribute up to $5,250 annually toward an employee’s student loans, and such payment would be excluded from the employee’s income.* The $5,250 cap applies to both the new student loan repayment benefit as well as other educational assistance (e.g., tuition, fees, books) provided by the employer. As an employer, you may make one time or multiple payments. The provision applies to any student loan payments made by an employer on behalf of an employee after the date of enactment and before January 1, 2021.

Trending now: Converting unused vacation time into a student loan debt payment benefit can be a win-win

What changed for borrowers?

On March 27, 2020 the federal government passed the CARES Act to address economic fallout during the COVID-19 pandemic.

  • All federally-held student loan payments have been temporarily, automatically, paused for all borrowers.
  • Payments are suspended until January 31, 2021**
  • Interest will not accrue on federally-held loans while payments are suspended.

Can borrowers continue to make payments?

Yes. Borrowers who are financially able to make student loan payments may want to continue to do so in order to take advantage of lack of interest accrual during this time period.

Student Loan Debt Benefit Solutions

To help employers address these challenges, Voya has formed a strategic relationship with Vault — an industry-leading student loan benefit technology provider— to offer flexible, tailored student loan benefit programs.  To learn more, contact your Voya Relationship Manager.


*Note that if you offer multiple education related benefits, you will want to track the amounts contributed to employees. Any amount that exceeds the $5,250 cap is subject to taxes.

**Updated on December 5, 2020.


This article was written by Heather Lowe of Vault, and used with their permission.  Vault is a separate entity and not a corporate affiliate of Voya Financial. Voya clients receive preferred pricing on any Vault product. Vault pays Voya Retirement Insurance and Annuity Company an ongoing quarterly fee for referring plan sponsors that elect Vault’s student loan debt services.


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