Tax break to help employers ease student loan debt included in $2 trillion stimulus package
A tax incentive for businesses that could bring some relief to more than 44 million Americans saddled with student debt has been included in the $2 trillion stimulus bill the Senate is expected to vote on Wednesday. The provision was originally part of a bill reported on by CBS News in May 2019.
It appears in the stimulus bill in Section 2206 and gives employers the ability to help employees pay off their student loans without being taxed, whether the payments are "paid to the employer or to a lender, of principal or interest on any qualified education loan...incurred by the employee for education of the employee."
Currently, a company can contribute up to $5,250 tax-free each year for tuition assistance, helping workers who are attending classes while on the job. But no such tax break is in the IRS code to help workers who are paying off student loans on degrees they've already earned.
Senators John Thune and Mark Warner introduced the bipartisan original bill to allow companies the tax credit. The measure already had the support of companies like Starbucks, Verizon and Hewlett Packard, and first daughter Ivanka Trump also liked the plan. Dozens of senators and over 140 House members backed the till, but because it's so difficult getting bipartisan legislation passed in this partisan climate, the bill was a little stuck — until the widespread economic devastation wrought by the coronavirus opened a window for it. That the measure offers fast help to both Americans struggling with their bills and companies that are trying to stay afloat likely made it an easy sell for inclusion in the stimulus.
One thing worth noting here — this is a temporary program. It would have to be renewed after January 1, 2021 to provide more lasting relief. It is likely to become part of the massive tax extenders package that is usually passed at the end of the year and fattened with all sorts of special-interest tax breaks. Supporters say they hope to make the program permanent and will fight to do so in the coming year.