CARES Act Authorizes Employer Assistance Toward Student Loan Repayment

CATEGORY: Client Update for Public Agencies, Private Education Matters, Public Education Matters
CLIENT TYPE: Private Education, Public Education, Public Employers
DATE: May 29, 2020

Under section 127 of the Internal Revenue Code, employers with a qualifying educational assistance plan may reimburse up to $5,250 of an employee’s eligible educational expenses on a nontaxable basis. In response to COVID-19, the Coronavirus Aid, Relief, and Economic Security (CARES) Act temporarily expands eligible expenses under section 127 to include employer assistance toward qualified student loan repayment. Employers may direct payment to the employee or the lender directly, and may cover principal and/or interest. However, only employer payments made during 2020 qualify.