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Troy, MI – April 23, 2020 – Edcor, a national provider of education benefits administration solutions that processed just under $250 million in tuition assistance payments and supported more than two million employees in 2019, is already seeing heightened interest in its student loan assistance benefit program following the March 27 announcement that the Coronavirus Aid, Relief and Economic Security (CARES) Act includes a maximum $5,250 tax credit for employers who offer student loan repayment assistance to employees.
Inclusion of the tax credit, a concept which had languished after being introduced to Congress in the spring of 2019, is intended to aid in the economy’s recovery following COVID-19 as U.S. workers, already awash in an estimated $1.52 trillion of student debt, face additional financial strife from the economic toll wrought from the coronavirus shut-down. Employers want to help to the extent that they can, says Edcor CEO and owner Adrienne Way, and the limited time frame of the CARES Act tax credit is a contributing reason to act.
“The tax credit in the CARES Act is in effect through December 31, 2020, so there’s a sense of urgency by some employers to move swiftly,” Way said. “Edcor is incentivizing decision making, too, including three months of administration at no charge to employers who sign up now for a multi-year contract for our Freedom student loan assistance services. I think the level of interest from employers over the next several months will ultimately determine if the tax credit is extended indefinitely.”
Managing the tax credit for tuition assistance and student loan assistance is a challenge for most companies as these benefits are managed (in many instances) by two different organizations. Edcor is the first to develop and implement a solution for their clients to manage the taxability for both benefits successfully.
Will tuition assistance surge?
It’s not only student loan assistance that’s getting attention amid the pandemic. Tuition assistance is getting a fresh look as a value benefit, too. Sara VanWagoner, Edcor Vice President of Corporate Growth, has heard from employers that they are interested in offering tuition assistance not only to train employees in skill areas with a demonstrated talent need, but also because of its relative low cost compared to a raise or bonus.
“Tuition assistance, like student loan assistance repayment plans, are flat fee benefits. They have value and meaning to employees and help them reach professional and personal goals. At the same time, they are less costly than raises and bonuses and are not compounding from year to year,” VanWagoner said. “COVID-19 may spur a trend to repackage benefits in general as employees keenly understand the financial restrictions placed on employers until the economy fully recovers. They know that raises may be unlikely, but a benefit boost may be the best substitute.”
In the meantime, VanWagoner says it’s difficult to determine the immediate impact on tuition assistance reimbursements due to the current timing of winter semesters ending and shortened spring/summer terms beginning.
“We serve a large number of state and national healthcare systems and their employees are overwhelmed with lifesaving pandemic duties, but it will be interesting to see how they do or don’t take advantage of tuition benefits available for classes beginning in May and June,” VanWagoner said. “In recent weeks, we have noted a small drop in reimbursement transactions in the healthcare sector, but the fall semester will be a much better gauge of determining if some healthcare workers put their education on a brief hold to recover from the stress of the pandemic.”
Student loan repayment programs administered by Edcor generally average a monthly benefit level payment of $100 per participant, while tuition assistance ranges from $1,500 to $3,000 per student per semester or $5,250 per year.
Edcor, a certified woman-owned business, is the benchmark in education benefits administration. For more than 38 years, our customized service and software solutions have allowed clients to use education benefits programs, including tuition assistance and student loan assistance, for employee recruiting, retention and development. Additional information can be found at https://www.edcor.com/.