There has been a recent shift in the global job sector – there’s an abundance of work but a severe scarcity of labor. As a result, employers are forced to look for new ways to distinguish themselves from their rivals.
Some businesses and corporations are now examining novel employee incentive schemes and raising wage levels to recruit and keep top personnel. One appealing strategy being used by many is promising to help employees pay back their college debt – and with the new federal rules, it has become easier for them to fulfill this promise
With that said, this article will outline how you, too, can key into this new strategy and get the best labor out there – so without further ado, here are some tips on how you can set up your own student loan payback plan.
Tips On Setting Up A Student Loan Repayment Program
Based on the experience of businesses that have already implemented student debt reimbursement schemes, the Society for Human Resource Management (SHRM) offers many suggestions for doing so. These pointers are:
Communicate Very Clearly With Participants
Make sure employees are aware that this benefit is taxable, meaning that extra federal taxes will be imposed on them as a result – which will translate to a reduction in their salary owing to the added tax strain undertaken by the company.
Establish your monthly or yearly student loan payback budget
Decide how much you’re prepared to invest in employee student debt relief first. Although the IRS permits you to provide each worker up to $5,250 tax-free annually, you are not required to do so to reap the scheme’s advantages.
Per the Education Data, the typical student debt monthly payment is $460, or $5,520 annually. It is sufficient to have a favorable effect on your workers if you repay a sizable percentage of these monthly installments.
You can start assisting with these payments slowly – SHRM advises starting out with a $50 to $100 monthly student loan payment. This enables your company to understand actual expenditures prior to the program’s expansion.
Ensure they fully understand these terms and agree in the presence of an attorney before they are allowed to sign up for the repayment program.
However, be very cautious with this project because there are many cases of companies and businesses starting these schemes and then running into serious financial issues as a result.
Select The Beneficiaries Of The Benefit
After choosing a monthly allowance, you must select who qualifies for the payback scheme. Will all of your workers be eligible for the benefit, only those who work full-time, or only those with a specific level of experience?
There are no restrictions on the development of employee classes with advantages for student debt repayment. To prevent prejudice against certain workers, it is a recommended practice to solely utilize job-based factors.
Adhere To IRS Standards If You Desire For The Initiative To Be Tax-free
You must abide by the IRS regulations for educational aid programs in Publication 15-B if you wish to provide a tax-free payback scheme.
Ensure you do not provide preferential treatment to highly paid workers – that is, those who earned more than $130,000 in the preceding tax year.
Further, do not provide more than 5% of its annual benefits to stockholders, their partners or children – the IRS defines a stakeholder as anyone who holds more than 5% of the equity or profit stake in a company. Also, do not allow any employee within the highest 20% of earners to participate in the program.
Additionally, ensure all qualified employees are informed earlier of the program.