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What is the most talked aboutbenefit in the new year? Student loan assistance programs. Recentsurveys confirm that student loans are a top concern amongemployees, especially recent grads, but it is not just a millennialissue. Many baby boomers have cosigned loans for their children orreturned to school themselves incurring debt at a time when theyshould be concentrating on preparations for retirement.

According to a Society for HumanResource Management survey, only eight percent of companiescurrently offer employer student loan repayment assistanceprograms, but that is double the number of companies who offeredthe benefit a year ago. It is important to understand that studentloan repayment programs are not the same as employer tuitionreimbursement programs. Employer sponsored tuition reimbursementbenefits are tax deductible up to an annual limit of $5,250 peremployee, but current student loan repayments aretaxable.

However, the EmployerParticipation in Repayment Act of 2019, a bipartisan bill, iscurrently being considered by Congress and if passed, it wouldallow employers to give tax free student loan assistance up to thesame limits as tuition reimbursement, but until that legislationpasses, what options are available for employees andemployers?

Student loans are complicated andthe various programs available today, may not work for all types ofemployers legally or financially. The simplest benefit is toprovide employees with access to organizations that will work withthem to help refinance or consolidate their student loans.According to the Federal Student Aid website, there are at least 20different types of student loans that are eligible forconsolidation.

There are pros and cons forconsolidating these loans and employees need to carefully considerwhat their future plans may entail, as once the loans areconsolidated the transaction cannot be reversed and employees couldlose benefits that may be of assistance should their plans for thefuture change.

In addition, the pros and cons forconsolidation differ for Federal versus Private loans and anydecisions regarding consolidation need to be made thoughtfully andwith careful consideration.

Pros for consolidation ofFederal student loans include the following:

1. Single monthlypayment

2. Lower payment amount byextending the repayment time period

3. Consolidating loans other thanDirect Loans (which are from the William D. Ford Federal DirectLoan Program) may provide the following:

1. Additional income drivenrepayment options
2. Public Service Loan Forgiveness(PSLF)
3. Renewed deferment or forbearanceoptions
4. Fixed interest rate
5. Cure a default

Cons for consolidation ofFederal student loans include the following:

1. Private loans are not eligiblefor consolidation into Direct Loans

2. Longer repayment periods mayresult in more interest being paid

3. May cause loss of interest ratediscounts, principal rebates, and some loan cancellationbenefits-Perkins loans

4. Possible loss of deferment orforbearance options

5. May lose credit for anypayments made under income driven or Public Service LoanForgiveness (PSLF) programs

6. Once the loans are consolidatedyou are unable to reverse the transaction

Pros for consolidation ofprivate student loans:

1. Single monthly payment ( andpotentially lower your interest rate – increase credit score bylowering debt-to-income ratio)

2. Choice of fixed or variableinterest rate

3. Release co-signer

4. Possibility of refinancingparent's PLUS loan into the child's name

5. Potential monthly paymentreduction

Cons for consolidation ofprivate student loans:

1. Strict credit requirement mayneed FICO credit score of 670 or higher

2. May require a degree from aTitle IV accredited school

3. Loss of federal loanbenefits

1. Income-driven paymentoptions
2. Public Service Loan Forgiveness(PSLF)

4. Shorter repayment periods –10-20 years as compared to 30 years (resulting in higherpayment)

5. Potential loss of deferment andforbearance options – interest continues to accrue

6. Shorter default determinationperiod

Many companies specialize inproviding student loan consolidation services. The websites andarticle links below provide an overview of the top firms and may beused as a resource to review the options available to employers andemployees in today's marketplace. You may also want to check withyour defined contribution plan recordkeeper as many of them arealso offering student loan repayment services for theircustomers.

• Studentaid.gov: Glossary, student aid
• Studentaid.gov: Repayment options
• Student Loan Hero
• Crediful
• Consumers Advocate
• U.S. News: Student loan consolidation
• Sofi
• Millennial Money

Innovest does not endorse any ofthe above referenced firms and the links are provided forinformational purposes only. The material provided in this articleis meant to provide information only and may not include all itemsto be considered. We recommend you consult your tax professionaland school administration office for guidance prior to making adecision to consolidate student loans.

Types of federal loansthat may be eligible for consolidation:

1. Subsidized Federal StaffordLoans

2. Unsubsidized Federal StaffordLoans

3. PLUS loans from the FederalFamily Education Loan (FFEL) Program

4. Supplemental Loans forStudents

5. Federal PerkinsLoans

6. Nursing StudentLoans

7. Nurse Faculty Loans

8. Health Education AssistanceLoans

9. Health Professions StudentLoans

10. Loans for DisadvantagedStudents

11. Direct SubsidizedLoans

12. Direct UnsubsidizedLoans

13. Direct PLUS Loans

14. Federal Family Education Loan(FFEL) - Consolidation Loans and Direct ConsolidationLoans (only under certain conditions)

15. Federal Insured StudentLoans

16. Guaranteed StudentLoans

17. National Direct StudentLoans

18. National Defense StudentLoans

19. Parent Loans for UndergraduateStudents

20. Auxiliary Loans to AssistStudents

Disclaimer: This information wasgathered from third-party sources and may not be a completelist.

Marianne Marvez, RPA,CEBS is a Vice President and Director at Innovest. She hasmore than 30 years of experience in the retirement plan sector. Sheis a member of Innovest's Retirement Plan Practice Group, aspecialized team that identifies best practices and implementsprocess improvements to maximize efficiencies for our retirementplan clients. Marianne holds the Certified Employee BenefitsSpecialist (CEBS) and the Retirement Plan Associate (RPA)designations from the International Foundation of Employee BenefitPlans and the Wharton School of the University of Pennsylvania. Sheis also holds the Series 65 License (Registered Investment AdviserRepresentative) though FINRA. Prior to joining Innovest, Marianne was aDirector with Empower Retirement, a Senior Consultant atStrategies, LLC, a Vice President and Senior Relationship Managerat Bank of America Merrill Lynch and spent 15 years with InvescoRetirement Plan Services as an Associate Partner and Senior ClientRelationship Manager.