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Educational Assistance for Employees Tax Credit

April 11, 2022
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WRITTEN BY Dr. Alan Moss

Executive Summary 

Student loan debt has increased substantially over the past several decades. During the past decade, and especially during the last two years, the length of time to fill vacant employment positions has risen substantially. Educational assistance programs that provide tuition and/or student loan repayments are popular with employees and are seen as ways to assist with employee recruitment and retention. The 2020 CARES Act added employee student loan assistance to the list of federally tax-exempt educational assistance programs. Senate Bill 1136 would allow employers to receive tax credits equal to the amount of student loan repayment assistance given to employees, up to $5,250 per employee per year. 

Highlights 

  • In 2019, 56% of employers offered tuition assistance and 8% of employers offered education loan repayment assistance nationwide.
  • In a survey of 30,000 student workers, education benefits were reported as the third most desirable voluntary benefit after retirement savings programs and paid time off.
  • On average, it cost $4,129 and took 42 days to hire a new employee in 2019. 
  • The length of time to hire new employees has been rising in the last decade with the most significant increases during the COVID pandemic.
  • In Missouri, 833,400 people have student federal loan debt with the average amount being $35,397.

Limitations 

  • During most of the COVID pandemic, there has been a pause on federal student loan repayments. It is unclear what effect this has had on employee student loan repayment programs.
  • There is more data on tuition reimbursement programs than student loan repayment programs. Because of this, it is unclear if student loan repayment programs would have the same positive effects on the recruitment and retention of employees.
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