ARLINGTON, Va.–(BUSINESS WIRE)–Mar 27, 2020–
Gradifi by E*TRADE today applauded Congress’ inclusion of key provisions of the Employer Participation in Repayment Act (H.R. 1043/S. 460) into a broad stimulus bill aimed at enhancing the US recovery from the COVID-19 epidemic.
The newly enacted statute will, among wider measures, offer tax relief for student loan repayment benefits programs. Employers are now able to make tax-free contributions of up to $5,250 per employee annually toward employee student debt without raising the employee’s gross taxable income. 1 Under prior law, both employees and employers faced tax obligations when participating in student loan repayment benefits.
Following the US government’s temporary halt on federal student loan interest charges, the passage of the bipartisan relief bill that was signed into law offers a path for employers to engage in long-term solutions for debt-strapped employees. Student debt has doubled in the last 10 years 2 and affects workers across all demographic categories: One in three Millennials carry student debt, 45 million parents hold student debt for their adult children, and senior citizens are the fastest-growing segment of student debt holders. 3
Many employers do not offer student loan benefits because the tax treatment created a burden for their employees and companies. This stimulus bill removes barriers for companies to enhance their employee financial wellness, recruitment, and retention offerings with pre-tax student loan repayment, and empowers employees to pay down their debt balances faster.
“We commend this decision by lawmakers to significantly help our nation’s employees, providing a financial wellness lifeline amid these extremely difficult times,” said Mike Pizzi, Chief Executive Officer of E*TRADE Financial. “This is a common-sense solution that will help employers attract, retain, and motivate a modern workforce. Student loan repayment benefits, now unburdened due to this new legislation, will undoubtedly play a key role in helping employees and employers work together to build healthy financial lives.”
“For many employees, financial success for tomorrow depends upon wise debt management today,” said Kate Winget, Managing Director of Gradifi by E*TRADE. “With the passage of this landmark legislation, now every penny contributed through employer student loan repayment benefits will go straight to paying down employee debt, pre-tax. This will allow many of the 46 million Americans who collectively owe more than $1.6 trillion in student debt 4 to take meaningful action.”
Gradifi by E*TRADE is an innovator in employee benefits for US employers. Its mission is to help employers build loyalty with their workforce by providing employee benefits that positively impact their employees’ financial well-being. Gradifi by E*TRADE offers a single-platform solution to allow employers to offer employees student loan refinancing opportunities, and employer-sponsored contributions to student loans and 529 college savings plan accounts. For insights from Gradifi by E*TRADE, visit www.gradifi.com or follow the company on LinkedIn.
- CARES Act 116th Congress (2019-2020). https://www.congress.gov/bill/116th-congress/house-bill/748?q=%7B%22search%22%3A%5B%22%5C%22Coronavirus+Aid%2C+Relief%2C+and+Economic+Security+Act%5C%22%22%5D%7D&s=3&r=2
- Gradifi by E*TRADE, “Separating Fact from Fiction: The Truth About Student Loan Benefits,” July 2019, https://notebook.gradifi.com/workplace-trends/separating-fact-from-fiction-the-truth-about-student-loan-benefits
- Newsweek, “The Truth About Student Debt: 7 Facts No One Is Talking About,” August 2019, https://www.newsweek.com/2019/08/23/student-debt-loans-truth-facts-cover-story-1453057.html
- Board of Governors of the Federal Reserve System (US), Student Loans Owned and Securitized, Outstanding [SLOAS], retrieved from FRED, Federal Reserve Bank of St. Louis, March 3, 2020, https://fred.stlouisfed.org/series/SLOAS
About E*TRADE Financial and Important Notices
The E*TRADE Financial family of companies provides financial services, including trading, investing, banking, and managing employee stock plans and financial wellness benefit plans. Employee stock and student loan benefit plan solutions are offered by E*TRADE Financial Corporate Services, Inc. Securities products and services are offered by E*TRADE Securities LLC (Member FINRA/SIPC). Commodity futures and options on futures products and services are offered by E*TRADE Futures LLC (Member NFA). Managed Account Solutions are offered through E*TRADE Capital Management, LLC, a Registered Investment Adviser. Bank products and services are offered by E*TRADE Bank, and RIA custody solutions are offered by E*TRADE Savings Bank, both of which are national federal savings banks (Members FDIC). More information is available at www.etrade.com.
In connection with stock plan solutions offered by E*TRADE Financial Corporate Services, Inc., E*TRADE Securities LLC provides brokerage services to stock plan participants.
E*TRADE Financial, E*TRADE, Gradifi by E*TRADE, and the E*TRADE logo are trademarks or registered trademarks of E*TRADE Financial Corporation. ETFC-G
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CONTACT: E*TRADE Media Relations
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Copyright Business Wire 2020.
PUB: 03/27/2020 04:37 PM/DISC: 03/27/2020 04:37 PM
Copyright Business Wire 2020.