- "One really critical provision within the CARES Act is that it allows employers to make contributions toward their employees' student loans tax free for the first time," Goodly CEO Greg Poulin said.
- The San Francisco startup outfits businesses with 401(k)-like student loan benefits programs. The CARES Act allows businesses to contribute $5,250 toward student debt this year, due to the coronavirus.
- "The unique thing about our system is that, by taking this approach, you can actually help the average employee on Goodly become debt free about 30% faster than they otherwise would have," Poulin said.
Employers can find it a little easier to assist their workforce in paying back student loans, thanks to the CARES Act, Goodly CEO Greg Poulin told CNBC's Jim Cramer Monday.
Goodly, a San Francisco-based startup that supplies companies up with student loan benefits programs similar to retirement savings accounts, could also find itself benefiting from the massive coronavirus economic recovery measure passed by the federal government last month.
"One really critical provision within the CARES Act is that it allows employers to make contributions toward their employees' student loans tax free for the first time," Poulin said in a "Mad Money" interview.
Before the CARES Act was implemented, about 8% of U.S. businesses provided a similar program to workers with college debt, he said, but there were roadblocks to the system.
"It was considered a taxable benefit for the employer, and it could often be a blocker or a barrier to employers implementing the system," Poulin explained.
Americans have about $1.6 trillion worth of student loans, according to the Federal Reserve Bank of St. Louis. The Trump administration authorized putting a hold on interest rates and payments for federal education debt due to a coronavirus outbreak that has led to widespread layoffs and a weakened global economy. Debt loads have kept many millennials out of the housing market, forcing many in the generation to delay other large purchases and investments, as well.
The CARES Act, the $2.2 trillion economic recovery act that President Donald Trump signed in late March, is offering business incentives to earmark money for student loan benefits through the end of 2020. Employers can reimburse employees up to $5,250 for student loan payments, contributions that will be free of tax.
Poulin said the program can help individuals pay student debt down more quickly, as is the mission of Goodly. The private firm works with companies to set them up with student loan payment programs that are akin to 401(k) programs, where businesses match employee contributions to their retirement fund.
A number of manufacturers and retailers, such as Ben & Jerry franchises, have partnered with Goodly on the initiative, he said. The company was founded in 2018 and has attracted $1.4 million from investors, according to Crunchbase.
"If you're an employer any contributions that you make go directly toward paying down the principal of the student loan and helping your staff pay off their student loans faster and save on the compounding interest," Poulin said. "The unique thing about our system is that, by taking this approach, you can actually help the average employee on Goodly become debt free about 30% faster than they otherwise would have."