Tax-Free Student Loan Help from the IRS

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Get Tax-free Help with Student Loan Program from the IRS

The Internal Revenue Service will host a free webinar on September 14, 2023. The webinar is to educate employers on how to can set up educational assistance programs for student loan repayment. Employers can help employees with student loan repayments, which are coming due for millions of people in October. There is a limited window of time for this educational assistance program, and the IRS wants to make sure employers don’t overlook this option that can help businesses attract and retain workers.

The IRS will be hosting a free 75-minute webinar starting at 2 p.m. ET on Thursday, Sept. 14, to help people understand the educational assistance programs. They will also cover how they can help student loan borrowers. The webinar will include a question-and-answer session.

Why Focus on Student Loan Programs Now?

While these kinds of educational assistance programs have been available for many years, the ability to use them to pay back student loans has been available only for payments made after March 27, 2020, and, under current law, will continue to be available until Dec. 31, 2025. That option has taken on more relevance now that the pause on student loan repayments is set to expire on Oct. 1. Interest starts to accrue on Friday, Sept. 1 after a years-long pause.

Why Should Employers Help With Student Loan Repayment?

With student loan repayments resuming, employers should take full advantage of educational assistance programs that can be used to help pay student loan obligations for their employees. This benefit not only provides a pathway towards student debt relief for borrowers but also gives employers the ability to recruit and retain high-quality talent.

There are some restrictions, however. By law, tax-free benefits under an educational assistance program are limited to $5,250 per employee per year. After that, assistance provided above that level is usually taxable as wages. For more information, see Publication 15-B, Employer’s Tax Guide to Fringe Benefits, and Publication 970, Tax Benefits for Education, Chapter 10.