IRS Tax-Free Student Loan Relief | 3 Ways Employers Can Help Pay Your Debt

IRS Tax-Free Student Loan Relief | 3 Ways Employers Can Help Pay Your Debt.With federal student loan payments set to resume soon, borrowers may be looking for ways to alleviate the financial burden.

IRS Tax-Free Student Loan Relief | 3 Ways Employers Can Help Pay Your Debt

The IRS has recently reminded employers that they can offer their employees up to $5,250 tax-free annually as part of their educational assistance benefits. This includes helping employees pay off their student loans. Here are three ways your employer can assist in paying off your student debt without incurring taxes.

1. Cover Tuition and Fees: One way employers can help their employees with student loan debt is by using their educational assistance program to cover tuition and fees for educational courses. This allows employees to continue their education without the financial strain.
2. Support Educational Expenses: Employers can also use the educational assistance program to pay for books, equipment, supplies, and other related education expenses. By easing the financial burden of these additional costs, employees can focus on repaying their student loans.
3. Direct Payments to Lenders: Another effective method is for employers to make direct payments to the employee’s lender to cover both the principal and interest on qualified education loans. These payments, made directly to the lender or the employee, qualify as tax-free assistance.

Encouraging Employers to Offer Educational Assistance Programs

The IRS recommends that employers who do not currently have an educational assistance program in place consider setting one up. In a competitive labor market, offering such benefits can help attract and retain talented employees. To further assist employers, the IRS is offering a free 75-minute webinar on September 14th to provide guidance on setting up educational assistance programs.

Conclusion

With millions of borrowers facing student loan debt, the IRS offers a tax-free solution through employer-based educational assistance programs. By taking advantage of these programs, employees can receive financial support in paying off their student loans, providing much-needed relief during these challenging times.