RISLA to provide aid to businesses seeking to take advantage of new federal student loan repayment deductions

PROVIDENCE – The federal government is allowing employers to provide a student-loan repayment benefit to employees on a tax-free basis, the R.I. Student Loan Authority announced on Monday.

The provision allows employers to deduct a contribution of up to $5,250 annually towards an employee’s student loans. The amount would be excluded from an employee’s income, but would qualify as a tax deduction for a participating business.

RISLA also said that it will be offering complimentary assistance to companies seeking to set up a student-loan repayment program. In addition, RISLA will also contribute a 10% match per employee covered by a repayment program of a participating company for up to $500 per employee.

“Student-loan repayment assistance programs allow employers to help their employees pay off their loans faster,” said Charles P. Kelley, executive director of RISLA. “Even before the coronavirus pandemic, employer student-loan repayment was one of the fastest-growing benefit additions among those organizations trying to overcome the challenge of attracting and retaining the best and brightest employees. Now tax free, this program also has the potential to make a big impact on the workplace satisfaction and overall wellness of valuable employees.” 

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The new deduction is in addition to the $5,250 cap on other educational assistance, which includes tuition, fees and books, provided by the employer under current law.

RISLA’s complimentary assistance will last for one year, from March 2020 through March 2021. The aid will also include guidance for business owners and human resource managers who would like RISLA to help counsel their employees on financial wellness, planning and saving for college, financial aid applications and making smart decisions on repaying their student loans, according to the authority.

More information on the program may be found online. Interested businesses were encouraged to reach out to Kelley at 401-743-1375.