OBBB Makes EAP Student Loan Assistance Provisions Permanent

The OBBB made permanent the favorable treatment for student loan assistance provided through educational assistance programs (EAPs), which was previously set to expire after 2025. The law also provides that the $5,250 dollar limit will be indexed for inflation starting in 2026. Since March 27, 2020, EAPs have been used to help employees repay principal and interest on qualified student loans. Student loans that qualify are generally those that also qualify for federal tax deduction purposes. That means the loan must have been incurred while the employee was enrolled at least half-time in the educational program and working toward a degree, certificate or recognized credential at an accredited educational institution. Employers can opt to reimburse the employee for student loan payments they have made, or they can elect to pay the student loan servicing company directly. For more information on the rules governing EAPs, visit Tax Facts Online. For more information on the rules governing EAPs, visit Tax Facts Online. Read More: Link to Q8889. Note: Q is updated.