September 11, 2024
On August 28, 2024, the IRS issued a reminder that principal and interest charges on employees’ qualified education loans are eligible expenses under educational assistance programs. Prior to March 27, 2020, eligible expenses were limited to items such as current tuition, fees, books, supplies, etc.; student loan repayment was not a qualified expense until after that date. After March 27, 2020, employers can either reimburse the employee or pay the lender directly for qualified education loan expenses up to the $5,250 annual limit. Currently, this provision is set to expire December 31, 2025.
As we reported in Compliance Corner in July, the IRS issued FAQs on educational assistance programs, which included FAQs addressing questions on qualified education loans and how employers can make those payments. Employers who sponsor or are considering sponsoring educational assistance programs should be aware that student loan repayment expenses are currently qualified expenses at least through December 31, 2025.
IRS Reminder: Employer Educational Assistance Programs Can Still Be Used to Help Pay off Workers’ Student Loans Through Dec. 31, 2025
PPI Benefit Solutions does not provide legal or tax advice. Compliance, regulatory and related content is for general informational purposes and is not guaranteed to be accurate or complete. You should consult an attorney or tax professional regarding the application or potential implications of laws, regulations or policies to your specific circumstances.
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