Employers will be able to make tax-free contributions to their employees’ student debt, according to one provision of the recently enacted CARES Act. The provision allows up to $5,250 in annual contributions without raising the employees’ taxable income. The provision applies to employer payments made starting with the CARES Act’s enactment through the end of 2020.
The American Bankers Association endorses Gradifi’s Student Loan Paydown program through which employers can make direct contributions to their employees’ student debt balances. “Student loan repayment benefits, now unburdened due to this new legislation, will undoubtedly play a key role in helping employees and employers work together to build healthy financial lives,” said Mike Pizzi, CEO of Gradifi parent company E-Trade Financial.