2021 Student loan updates: What does it mean for employers?
This post has been updated to reflect changes implemented by the Biden Administration on August 6, 2021.
- Employers can now make tax-free payments of up to $5,250 annually per employee until January 1, 2026
- Both federal student loans and private student loans are eligible
- Employers and employees save on federal payroll taxes on qualifying payments
Student loan contributions vs. tuition assistance
- The $5,250 per employee matches the tuition reimbursement tax exempt maximum contribution
- Plan sponsors that already have budget for tuition reimbursement can redirect that towards student loan contributions
- Offering both benefits can broaden the number of employees taking advantage of an education-related benefit
- Note that if you offer multiple education related benefits, you will want to track the amounts contributed to each employee – since any amount that exceeds the $5,250 cap is subject to taxes
Federal student loan payment suspension
- All federally-held student loan payments have been temporarily paused for all borrowers
- Payments are suspended until January 31, 2022
- Interest will not accrue on federally-held loans while payments are suspended
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.
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Vault is a separate entity and not a corporate affiliate of Voya Financial. Voya clients receive discounted pricing on any Vault product. Vault pays Voya Retirement Insurance and Annuity Company (VRIAC) an ongoing quarterly marketing fee for referring plan sponsors that elect Vault’s student loan debt services.
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