The federal pandemic relief package provided a five-year extension of a new program that allows employers to make nontaxable payments of up to $5,250 to employees as student loan repayment assistance. The student loan repayment assistance program (LRAP) is now extended through 2025, according to Forbes.
This means this employee benefit aimed at easing the college debt burden so that employees have money to save for retirement will remain exempt from income and FICA taxes for both employers and employees.
The extension on repayments, and the waiver on interest during the time payments are suspended, is still scheduled to end on Jan. 31.
President-elect Joe Biden has said a student loan repayment extension is needed, but there are no details yet on the timeframe.