With regularity, major news sources are publishing articles about the crushing student loan debt burden
Prior to the COVID-19 pandemic, the competition to attract and retain talent was fierce. While national unemployment has surged, in certain industries the shortage of qualified workers remains. 1 According to a recent survey by the organization American Student Assistance, one benefit employees find desirable is assistance with paying off their student loan debt. 2
Student loan repayment assistance, which started as a niche offering by a few companies, is becoming a more common workplace benefit. Since 2018, the number of employers offering student loan assistance has doubled, and these employer – offered programs are expected to continue growing despite a stagnant economy, 3 in part because of tax benefits introduced by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. 4
This article examines the student loan burden in the United States, reviews programs designed to assist borrowers with repayment, and discusses the tax issues associated with student loan repayment assistance programs and debt forgiveness.
Although tax implications are the primary focus of this article, alternative ways of repaying student loans are also discussed
There are more than 45 million American borrowers who collectively owe nearly $1.6 trillion in student loan debt, a burden amounting to nearly 8% of national income. 5 Forty – six percent of federal student loan borrowers surveyed said they expected to struggle making their payments once forbearance relief ended under the CARES Act. 6 Research shows that post – college debt often compels people to delay marriage and reduces the borrower’s ability to purchase a house and save for retirement. Excessive debt can also affect a student’s post – college career choice, employment s. 7
Fifty – nine percent of respondents to a survey conducted in reported facing increased stress, anxiety, and depression stemming from their student loans during the pandemic. 8 Furthermore, financial stress and anxiety have been shown to affect an employee’s ability to concentrate and job satisfaction. Individuals and employers are increasingly aware of the student loan debt crisis and are looking for solutions.