How do student loan repayments by your employer work?

konnor aiden · Joined: 14 Sep 2009 Posts: 18

I recently graduated and I've heard some companies will offer "loan repayments". Do I understand correctly that I don't pay any taxes on this amount? Does it matter if its federal or private loans? Can anyone (employer) offer this type of incentive?

MissLA · Joined: 20 Oct 2009 Posts: 10

If they're paying your loans I see no reason why you'd be taxed for this. As per whether employers offer this; that just depends on the field.

If an industry is recruiting hard and unable to find employees, then maybe they'd offer this type of incentive.

BUT!!! With unemployment at an all time high and plenty of over qualified workers looking for ANY job, I highly doubt an employer would pay such an expense for retaining employees.

Good luck finding this type of employer, I'm willing to take most types of finance work even without these kinds of benefits (born, raised, and living in So.California, USA) so tell me why someone would hire you over me when I can't even find work. Eh? :P Supply and demand. Countries gone to ....

Hopefully federal government will step in and create some jobs, full employment act is needed badly :/

Then we will get those type of benefits, maybe future free education (like most european countries)?

Point is, with the current job market, you may have a tough time finding the job you'd hope for, if any job at all :/ so as for benefits like that? Not in this market.

Roger_Silvester · Joined: 29 Jun 2009 Posts: 51

Employers take the loan repayments from the graduate's salary at the time that other deductions, such as tax and national insurance are made. At the end of every tax year these payments are then sent from the graduate's employer onto HM Revenue and Customs (HMRC). HMRC then send this information onto the SLC which then calculates the repayments that the graduate has made to pay off their loan (bearing in the mind the interest that has been accrued on the outstanding balance in the last 12 months.) After this has been done the SLC will send a statement to the graduate detailing their new balance.

The interest rate that is applied to income contingent student loans is tied to the RPI, so that students should never have to repay more than they have actually borrowed in real terms. The interest rate is determined either by using the rate of the RPI in March, or as was introduced for the first time this year, the interest rate is calculated by collating the highest base rate of a number of major banks plus 1%. Whichever is the lower is applied to student loans.

Elmira Nancy · Joined: 13 Nov 2009 Posts: 28

If you are in the US, this would be income to you.The only times it wouldn't be is if you took the loan with the contractual agreement that you would work in an underserved area for x number of years.