Educational Assistance Programs: A Solution to Workers’ Student Loans
Did you know that educational assistance programs can be a lifeline for employees struggling with student loans? These employer-offered programs have traditionally been utilized to cover costs such as books, equipment, supplies, fees, tuition, and other educational expenses. However, a recent change now allows these funds to be used towards paying off the principal and interest on an employee’s qualified education loans.
The Benefits of Educational Assistance Programs
When payments are made directly to the lender or to the employee, they qualify under these programs. It’s important to note that tax-free benefits from an educational assistance program are capped at $5,250 per employee annually. Any assistance provided above this limit is typically taxable as wages.
Recent Changes to Educational Assistance Programs
While educational assistance programs have been around for quite some time, the option to use them for student loan payments is a recent development. This option only applies to payments made after March 27, 2020. According to current legislation, this option will remain available until December 31, 2025.
Additional Information on Educational Assistance Programs
For further details on other requirements, you can refer to the Publication 15-B, Employer’s Tax Guide to Fringe Benefits and Publication 970, Tax Benefits for Education – Chapter 10. These resources provide comprehensive information on what qualifies as a student loan.
In conclusion, educational assistance programs are not only beneficial for employees looking to further their education but also for those grappling with student loans. With the recent changes, these programs now offer a broader range of financial assistance to employees, making them an even more valuable benefit.