On Aug. 6, the Internal Revenue Service (IRS) reminded employers that student-loan payments can be included as part of their educational assistance programs.
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On Aug. 6, the Internal Revenue Service (IRS) reminded employers that student-loan payments can be included as part of their educational assistance programs. Employers may pay up to $5,250 each year toward educational benefits.
Federal student aid data indicates that an average loan balance at graduation is $38,375. This will be lower for a bachelor's degree and higher for a master's or doctoral degree. The average student debt for a bachelor's degree is now $29,300. Because there are additional costs for a master’s degree, the average debt for those students is $66,000. Finally, the largest debts are generally for individuals who have attended medical school; the average debt for doctors who graduate after eight years of education is $264,000.
Student debt is generally lower for individuals who attend public universities; since tuition is higher at private colleges and universities, attendees frequently graduate with larger debt.
The estimated total student-loan debt is now approximately $1.77 trillion, spread among thousands of students. The average annual payment on student loans is $6,432. The Education Data Initiative reports that many borrowers take up to 20 years to pay off student-loan debt. The approximate interest rate for student loans is currently 6.5%.
With substantial amounts of student loans, the employer loan payment is welcomed. The educational assistance of $5,250 is usually allocated toward tuition, books or other educational expenses. However, the employer may allocate up to this amount to repay student loans. If the employer repays the student loan, the time for repayment of the balance may be greatly reduced.
The American Legion’s Fund Development program is a way of establishing your legacy of support for the organization while providing for your current financial needs. Learn more about the process, and the variety of charitable programs you can benefit, at legion.org/plannedgiving. Clicking on “Learn more” will bring up an “E-newsletter” button, where you can sign up for regular information from Planned Giving.
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