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Employer Participation Repayment Act – EPRA

  May 18, 2021  |    #Eliminate Debt

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What is the Employer Participation Repayment Act or EPRA?

Wanna get your boss to pay off your student loans? And we all say, “Hell yeah!” Thanks to both the Employer Participation in Repayment Act, it may be possible. Find out how on this Queer Money®. Meanwhile, grab your free copy of the 5 Building Blocks of a Happy Gay Life here.

Get more info on the EPRA on this Queer Money®: 

EPRA or Employer Participation in Repayment Act High Level 

EPRA is a provision that allows employers to use up to the $5,250 max they would normally use for tuition reimbursement when a student is going to school while employed to instead pay for past education via paying on student loans either via payments to the employee like tuition reimbursement or directly to the loan servicers.

EPRA was introduced as part of the CARES act and signed into law by Trump originally in 2020 and was only designed to be available for the 2020 tax year. The act was updated in 2021 under the Biden administration and was extended to 2021 and will allow employers to pay towards employee student loans through January 2026. This allows you to claim or receive up to $5,250 per year as a payment towards your student loans. Pretty sweet deal right? You can read the one-page act here.

Answers to questions about the Employer Participation in Repayment Act

Below are answers to a number of frequently asked questions about the EPRA.

1. What are the benefits of the EPRA?

There are 3 primary tax benefits associated with your employer paying towards your student loans. They are:

    1. Neither you as the employee or your employer need to pay payroll taxes on the money paid out. This means saving of roughly $402 in FICA taxes that both would normally pay if the $5,250 was paid as salary or wages.
    2. Your employer doesn’t have to pay unemployment tax on these funds, which can vary depending on the state you claim your salary or wages.
    3. You as the employee do not have to pay income taxes on these funds, acts as a tax-free bonus/benefit, potentially saving your thousands of dollars in taxes depending on your federal tax bracket and if you pay state, city and local taxes on income.

2. Are Federal, private or both loans covered by the EPRA?

All student loans, whether they be Federal or private are covered. Private loans through a family member or non-lending business may be harder to verify, so check with your HR department if there is a way for you to verify these types of loans. If your loans were taken out in your parent’s names, you may be able to prove their use towards your tuition via the payment paperwork, allowing for your employer to pay towards loans not in your name. Again, check with your HR representative.

3. Is my employer required to participate in the EPRA?

No, they are not. It’s all voluntary.

Just like tuition reimbursement is voluntary and a benefit, this is an optional benefit.

  • According to Student Loan Hero, roughly 8% of employers are paying towards student loans and have a list of 20 that are doing it right now.
  • There are a variety of ways and amounts these employers are paying
    • A number are paying $100 per month
    • Google is providing a lump sum of $2,500 per year
    • Nvidia is offering to pay $500/mo or the total monthly student loan payment whichever is lower, i.e., if you pay $430/mo then they pay $430
    • Federal employees can get up to $10,000/yr with a $60k lifetime max, but only toward federal student loans

4. How do I find out if my employer is participating in the Employer Participation Repayment Act?

Ask! Go on your company benefits site to see what the provisions are around tuition reimbursement and student loan repayments. It is likely listed in the same benefits area.

5. How to ask your employer about the Employer Participation in Repayment Act? 

Below is suggested verbiage you can either copy and paste into an email or copy and modify for your situation:

6. Will EPRA payments from my employer hurt me if I am on an income-based repayment plan?

No, it will not. Again, this is considered a benefit from your employer and not income, that’s why you’re not taxed. Again, for tax purposes, this is treated exactly like tuition reimbursement from your employer which does not affect your reported income.

7. Will EPRA payments from my employer hurt me if I am on the 10-year student loan forgiveness plan?

No, and to be honest, this could potentially help you with the 120 months of continuous payments you must make. If you’re able to get your employer to pay the loans directly on a monthly basis it may help you not miss a payment. If you receive a lump sum, then throw the funds into a high-yield savings account and set up automatic payments to ensure you do not miss a payment during your 10-year repayment plan.

How to Ask Your Employer About the Employer Participation in Repayment Act

Use the verbiage below as a way to ask your Human Resources department if your employer is participating in the program or if there is anything you can do to encourage them to do so. The more folks sending these types of requests the more likely your employer will be enclined to participate, potentially helping you with thousands or tens of thousands of dollars towards your student loan.

To Whom It May Concern,

I recently learned that the 2020 CARES ACT and the subsequent Employer Participation in Repayment Act of 2021 allow for employers to direct funds normally designated for tuition reimbursement towards paying a portion of employee’s existing student loans. I wanted to share this with you. This is a voluntary program that provides tax benefits for both employers and employees. Are you able to direct me to if and where our company may be participating in this program?

Based on this podcast episode and this article it appears numerous companies are doing this right now. Some are offering lump-sum payments while others are doing a set dollar amount monthly. With the climate of the current job market, having this benefit would be a great tool for both retention and attraction for workers who are faced with high student loan debt. I personally would feel a stronger sense of loyalty to our company if this program exists and would share it with my friends and colleagues as a way to encourage them to join us here.

If we do not have this benefit available right now, is there anything that I can do to help create a proposal to encourage HR to consider adding this benefit before the Employer Participation in Repayment Act expires in 2026?

Thank you,

Let’s do this! Let’s get more employers helping their employees with student loan debt. Share this article/podcast with your friends and colleagues and ask them to use the verbiage above to send a request to their HR department.

Resources mentioned in the podcast episode

5 Building Blocks of a Happy Gay Life

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