This column will appear in the January 2023 issue of the ISVMA Epitome.
One of the biggest concerns in the veterinary industry today is the difficulty in hiring veterinarians. And one of the biggest concerns for veterinary students—and barriers to potential students—continues to be managing a high educational debt load.
The Employer Participation in Repayment Act offers one step that could help relieve both student debt and difficulty in hiring.
A Win for Employers and New Graduates
This law, enacted in 2020, allows employers to make payments toward an employee’s student loans. It offers substantial tax advantages to both parties. The payment does not count as taxable income—and is not subject to federal and state withholding or Social Security—for the employee. The employer does not owe payroll taxes since the money is not paid as salary, and the employer can deduct the entire payment as a business expense. Win-win.
And yet, despite this opportunity being available for more than two years, many veterinary employers have not been taking advantage of it. At a session devoted to the topic at our college’s Annual Fall Conference for Veterinarians in September, none of those in attendance were participating.
The Employer Participation in Repayment Act expands the tax exclusion for employer-provided educational assistance to include payments toward qualified education loans. Under Section 127 of the Internal Revenue Code, employers are allowed to provide tax-free payments of up to $5,250 per year to eligible employees for qualified educational expenses. Payments of principal or interest can be made directly to employees or to the lender.
Recruitment and Retention
According to Dr. Larry Firkins, professor emeritus, “When you figure in tax savings and salary base for loan repayment calculations, that $5,250 payment from the employer is actually worth nearly $8,000 to the employee.” Dr. Firkins, who retired last May, has continued to teach the business elective courses he created while a faculty member.
He has suggested that new graduates make sure prospective employers are aware of this act so it can be included as part of the total compensation for the new graduate. For veterinarians with educational debt who are already in the workforce, this loan repayment act can become part of a retention package.
Dr. Firkins advises employers to learn the details of this opportunity. Employers must, for example, have a written educational assistance plan and make all eligible employees aware of the plan. Additionally, an employee may not receive more than $5,250 in one year from all employers combined.
Support Scholarship Funds
Another great way to fight student debt and create a legacy in your name at our college is to endow a scholarship. For details on that process, please reach out to our advancement team at 217-333-2761 or advancement@vetmed.illinois.edu.
Photo credit: Veterinary students talk with recruiters at the 2022 Hire an Illini Job Fair.
