The private sector wants to participate in the student debt crisis in the United States

The private sector wants to participate in the student debt crisis in the United States

Companies are starting to play a role in reducing America’s growing student debt.

Why is this important: Widespread proposals for student debt relief have stalled in Washington. Companies are seizing an opening that also benefits them: a benefit that attracts workers – and in some cases, tax relief.

Catch up fast: A provision inserted into the original COVID-19 relief package provides a tax incentive to businesses that help pay employees’ student debt. It has since been extended until 2025.

  • How it works: Companies can pay up to $5,250 annually on each employee’s student debt tax-free. (Employees won’t pay taxes on it, either.)
  • Tuition assistance up to this amount was tax-exempt prior to the enactment of the federal relief program.

Yes, but“Many of the most vulnerable borrowers – including those who have lost their jobs during the pandemic – will not receive help from their employers,” says Sarah Sattelmeyer of the New America think tank.

  • Implementing a program like this may be too expensive or time-consuming for some companies. (That’s if they know it at all.)
  • To note : It’s unclear how many companies took advantage of the pandemic-era tax incentive. Before COVID-19, about 8% of companies offered student debt repayment, up from 4% in 2018, according to SHRM (the Society for Human Resource Management).

What they say“Companies are the beneficiaries of the education students have received. So we should be willing to help them reduce [student debt] — or pay for it completely,” Dan Rosensweig, CEO of Chegg, the online education company, told Axios.

  • Chegg, known for its textbook rental service and other online services for students, launched a student debt repayment program in 2019 with $5,000 a year offered to company employees for at least 2 year.
  • About $700,000 in total was paid out to the 146 program participants.

The backdrop: Employers are playing a bigger role in tackling college costs in an effort to attract workers and keep those they have from jumping ship.

  • Walmart and Target have become the latest to cover tuition at some colleges.

And after: Pandemic student debt relief expires next year — following what the Biden administration has billed for “the final extension” to freezing federal loan repayments and defaulted loan collections.

Robert P. Matthews