ARLINGTON, Virginia – () – Gradifi by E * TRADE today welcomed the inclusion by Congress of key provisions of the Act respecting employer participation in reimbursement (HR 1043 / S. 460) into a broad stimulus bill aimed at strengthening the United States’ recovery from the COVID-19 outbreak.

The newly enacted law will provide, among broader measures, tax relief for student loan repayment programs. Employers are now able to make tax-free contributions of up to $ 5,250 per employee each year to pay off employee student debt without increasing the employee’s gross taxable income.1 Under previous law, both employees and employers were subject to tax obligations when participating in student loan repayment benefits.

Following the temporary halt by the US government of interest charges on federal student loans, the passage of the bipartite relief bill that has been enacted gives employers the opportunity to engage in solutions long term for employees short of debt. Student debt has doubled in the past 10 years2 and affects workers across all demographics: one in three millennials have student debt, 45 million parents have student debt for their adult children, and the elderly are the segment of student debt holders that is the fastest growing.3

Many employers do not offer student loan benefits because the tax treatment has created a burden on their employees and businesses. Stimulus Bill removes barriers that prevent businesses from improving their financial wellness, recruiting and employee retention offerings with pre-tax student loan repayments, and enables employees to pay off debts faster .

“We applaud this decision by lawmakers to significantly help employees in our country, offering them a financial lifeline in these extremely difficult times,” said Mike Pizzi, CEO of E * TRADE Financial. “This is a common sense solution that will help employers attract, retain and motivate a modern workforce. Student loan repayment benefits, now lightened thanks to this new legislation, will undoubtedly play a key role in helping employees and employers work together to build a healthy financial life.

“For many employees, tomorrow’s financial success depends on smart debt management today,” said Kate Winget, Managing Director of Gradifi by E * TRADE. “With the passage of this landmark law, every penny paid through employer student loan repayment benefits will go directly to paying off employee debt, before tax. This will help many of the 46 million Americans who collectively owe more than $ 1.6 trillion in student debt.4 take meaningful action.

Gradifi by E * TRADE is an innovator in employee benefits for US employers. Its mission is to help employers retain their workforce by offering them benefits that have a positive impact on the financial well-being of their employees. Gradifi by E * TRADE offers a single platform solution to enable employers to offer employees student loan refinancing opportunities and employer sponsored contributions to student loans and 529 education savings plan accounts. For information on Gradifi by E * TRADE, visit www.gradifi.com or follow the company on LinkedIn.

  1. CARES Law 116th Congress (2019-2020). https://www.congress.gov/bill/116th-congress/house-bill/748?q=%7B%22search%22%3A%5B%22%5C%22Coronavirus+Aid%2C+Relief%2C+and + Economic + Safety + Act% 5C% 22% 22% 5D% 7D & s = 3 & r = 2

  2. Gradifi by E * TRADE, “Separating Fact from Fiction: The Truth About the Benefits of Student Loans,” July 2019 https://notebook.gradifi.com/workplace-trends/separating-fact-from-fiction-the-truth-about-student-loan-benefits

  3. Newsweek, “The Truth About Student Debt: 7 Facts Nobody Talks About”, August 2019, https://www.newsweek.com/2019/08/23/student-debt-loans-truth-facts-cover-story-1453057.html

  4. Federal Reserve System Board of Governors (United States), student loans held and securitized, outstanding [SLOAS], from FRED, Federal Reserve Bank of St. Louis, March 3, 2020, https://fred.stlouisfed.org/series/SLOAS

About E * TRADE Financial and important notices

The E * TRADE Financial family of companies provides financial services including trading, investing, banking, and management of employee share ownership plans and financial welfare benefit plans. Employee share plan and student loan solutions are offered by E * TRADE Financial Corporate Services, Inc. Securities products and services are offered by E * TRADE Securities LLC (FINRA / SIPC member). Commodity futures and options on futures products and services are offered by E * TRADE Futures LLC (NFA member). Managed account solutions are offered by E * TRADE Capital Management, LLC, a registered investment advisor. Banking products and services are offered by E * TRADE Bank, and RIA custody solutions are offered by E * TRADE Savings Bank, both of which are National Federal Savings Banks (FDIC members). More information is available at www.etrade.com.

As part of the stock plan solutions offered by E * TRADE Financial Corporate Services, Inc., E * TRADE Securities LLC provides brokerage services to stock plan participants.

E * TRADE Financial, E * TRADE, Gradifi by E * TRADE and the E * TRADE logo are trademarks or registered trademarks of E * TRADE Financial Corporation. ETFC-G

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