COVID-19 & CARES ACT

2020 CARES Act: Repay employee student loans up to $5,250 tax-free, extended through December 31, 2025

The incessant stress and anxiety of the pandemic has worn employees down: December marked the lowest levels of employee well-being since the start of the pandemic, according to the Mental Health Index by Total Brain and the National Alliance of Healthcare Purchaser Coalitions.

Employers who help repay employee student loans take a big step in forming lasting trust and partnership with valued staff.

The Eagle Hill survey found that workload was the top reason employees were feeling burned out. The average workday has increased by an additional three hours during the pandemic, according to NordVPN Teams, a remote software provider.

Burned out employees are less productive and more likely to suffer from other health issues, like depression, high blood pressure and substance use disorders. Burnout, when not addressed, costs employers $125 to $190 billion in lost productivity and healthcare costs, according to Gallup.

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Status

Optional, but highly
recommended*

Source

The CARES Act

Effective timeline

December 2025

* The Coronavirus Aid Relief and Economic Security Act (the “CARES Act”) provides a way for employers to help repay employee student loans, with tax benefits for both the employer and employee. Generally, a Section 127 Education Assistance Plan only allows an employer to pay or reimburse tuition and other qualified educational expenses incurred while the employee is with that employer. Section 2206 of the CARES Act modifies Section 127 of the Internal Revenue Code so that employers can pay up to $5,250 to repay employee student loans during the pandemic emergency period beginning March 27, 2020, and ending December 31, 2025. The amount paid is tax-free to employees and tax-deductible for the employer.

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