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Employer Student Loan Repayment Assistance: What It Is & How to Get It

The Coronavirus Aid, Relief and Economic Security (CARES) Act provided much-needed relief during the height of the COVID-19 pandemic. One of the provisions of the CARES Act was the temporary suspension of student loan payments, which will likely come to an end this summer. There was, however, another relief measure that did not get as much attention and is still active through 2025 – employer student loan repayment assistance.

Employer Student Loan Repayment Assistance – a Brief Overview

Although employer student loan repayment assistance existed before the pandemic, the CARES Act made it more attractive to offer this type of employment perk. Under Section 2206, employers are now allowed to make up to $5,250 in tax-free annual payments to an employee’s federal student loans. Payments are also tax-free for the employee. That means no additional payroll taxes for the employer and no income tax for the employee. Payments made in excess of the $5,250, however, are subject to payroll and income taxes.

Originally, this tax benefit was set to expire in December 2020 but it was extended through December 31, 2025, when Congress passed the Consolidated Appropriations Act of 2021.

Types of Employer Repayment Programs

There are two main types of employer student loan repayment programs: direct repayment and discretionary. The first type, direct, is when an employer makes payments directly to the employee’s student loan. Under a discretionary plan, employees can allocate benefits dollars to their student loans. Examples of these programs include:

  • PTO and/or vacation swap. If an employee has time left on the books, they can cash it in and apply the funds to their student loan debt.
  • Signing bonus offer. Instead of a cash offer, the employer makes a payment to the employee’s student loan upon signing with the company.
  • Matching contributions. Similar to a retirement plan matching program, employees allocate a certain amount of their paycheck to go toward student loan repayment. Employers then match the payments up to a certain percentage.

Many employers elect to use direct repayment and simply set up reoccurring payments, either via employee paycheck or directly through the student loan lender.

Companies That Offer Student Loan Repayment Programs

Prior to the CARES Act, only 8% of U.S. employers offered student loan repayment assistance, according to a survey by the Society of Human Resources Management. A 2021 survey from the Employee Benefit Research Institute shows that the number has now increased to 17%, with another 31% having indicated that they plan to include this type of benefit in the near future.

Many well-known companies currently participate in employer student loan repayment programs. Here is a brief overview of some of their plans.

  • Estée Lauder – monthly student loan payments up to $100 with a maximum cap of $10,000.
  • Google – matches employees’ student loan payments, up to $2,500 per year.
  • SoFi – offers $200 per month for student loan payments with no annual or lifetime cap.
  • Chegg – entry- and manager-level positions receive up to $5,000 annually in repayment assistance.
  • Hulu – employees receive $100 per month for student loan payments. There is a $6,000 cap.
  • Ally Financial – up to $100 a month for student loan repayment, with a lifetime cap of $10,000.
  • Aetna -matches employee student loan payments dollar for dollar, up to $2,000 annually for a lifetime maximum of $10,000.

How to Start an Employer Repayment Assistance Program

If you’re unsure whether your employer offers student loan repayment assistance, contact your human resources (HR) department. Even if this benefit isn’t currently available, don’t give up hope just yet. With the Great Resignation, many employers are struggling to retain or attract talent. An employer student loan repayment program could be one way to entice better candidates to apply.

When bringing up the subject of a repayment assistance plan with your HR officer, be sure to mention the following:

  • Tax advantages (tax-free up to $5,250 per employee through 2025)
  • Other companies that already offer repayment assistance plans
  • Ways your student debt impacts your life and mental well-being
  • Tools that can help launch the program at your company

You never know; with a little bit of preparation and persuasion, you just might convince your company that an employer student loan repayment assistance program is a great idea!