Ibrahim Gardner
As student loan debt continues to rise, more companies are offering student loan repayment benefits to help borrowers pay off their debt. Student loan repayment assistance is becoming an increasingly popular employee benefit, with the number of companies offering it doubling between 2018 and 2019. This benefit can help employees pay off their student loans faster, but program structures vary. Some companies offer a signing bonus or a lump-sum payment, while others make recurring payments directly to the lender or include the assistance in the employee's paycheck. Some employers may also contribute to an employee's retirement if they put a certain percentage of their paycheck toward student loans.
| Characteristics | Values |
|---|---|
| Types of student loan repayment assistance | Direct repayment programs, discretionary programs, signing bonuses, recurring payments, trading in PTO/vacation time |
| Amount | Up to $5,250 per employee per year tax-free under the CARES Act of March 2020 and the Consolidated Appropriations Act |
| Companies offering student loan repayment benefits | Ally Financial, Chegg, Google, Fidelity, Aetna, Carhartt, Carvana, Hulu, Freddie Mac, Andersen, Guardian |
| Eligibility | Full-time employees, part-time employees, employees who have been with the company for a set period |
| Benefits for employers | Attracting and retaining talent |
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What You'll Learn
Student loan repayment assistance as an employee benefit
Student loan repayment assistance is an increasingly popular employee benefit. In 2019, only 4% of companies offered this benefit, but that number grew to 8% in 2019 and 14% in 2024. This benefit can help employees pay off their student loans faster, and it also helps employers attract and retain top talent.
There are a few different types of student loan repayment assistance programs that employers can offer. One option is a direct repayment program, where the employer puts cash payments directly toward an employee's student loan. This can be done through recurring payments or by matching the employee's contributions each month. Another option is a discretionary program, which allows employees to allocate their company's discretionary benefit dollars to their student loan debt. Additionally, some companies offer signing bonuses or lump-sum payments when employees first start, which they can put toward their student loan debt.
Some specific examples of companies that offer student loan repayment assistance include:
- Ally Financial: $100/month in assistance, with a lifetime max of $10,000
- Aetna: $2,000/year in student loan assistance, with a lifetime max of $10,000
- Fidelity Investments: up to $15,000 in student loan repayment assistance
- Google: up to $2,500/year in student loan repayment assistance
If you're interested in finding an employer that offers student loan repayment assistance, you can check with the human resources department of potential employers to see if they offer this benefit. You can also look for positions with companies that are known to offer this benefit, such as those listed above. Additionally, you may be able to access student loan repayment assistance programs through a federal or state government agency based on your career choice. For example, health professionals, public defenders, military members, and STEM workers may be eligible for such programs.
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Companies offering student loan repayment
As student debt continues to rise, more companies are offering student loan repayment benefits to help borrowers pay off their debt. According to the International Foundation of Employee Benefit Plans (IFEBP), only 4% of companies offered student loan repayment benefits in 2019, but that number grew to 14% in 2024.
Some companies that offer student loan repayment assistance include:
- Ally Financial: This financial services company offers its employees $100 per month in student loan assistance, with a lifetime maximum of $10,000.
- Carhartt: This durable workwear clothing company provides monthly payments towards the principal on its employees' student loans.
- Chegg: This online education company offers an Equity for Education Program to help its employees repay their student loans.
- Fidelity Investments: This financial services company provides up to $15,000 in student loan repayment assistance for its employees.
- Google: The tech giant offers up to $2,500 per year in student loan reimbursement, but there is no information on the lifetime cap for these benefits.
The structure of these programs varies depending on the company. Some companies offer direct repayment programs, where they put cash payments directly towards an employee's student loan. Others may match their employees' contributions each month. Additionally, some companies offer signing bonuses or recurring payments. It's important to understand the specific requirements and eligibility criteria of each company's program before enrolling.
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Government assistance programs
Loan Forgiveness Programs
The Federal Student Aid office offers several loan forgiveness programs. One such program is the Public Service Loan Forgiveness (PSLF) Program, which forgives the remaining balance on your Direct Loans if you work full-time for a government or not-for-profit organization and make a certain number of payments. The Teacher Loan Forgiveness (TLF) Program offers up to $17,500 in loan forgiveness for teachers who work full-time for five consecutive academic years in specific schools serving low-income families. The US Department of Education and Department of Defense also have special benefits for military service members with federal student loans.
AmeriCorps Service
If you complete a term of national service with an approved AmeriCorps program, you are eligible to receive the Segal AmeriCorps Education Award, which can be used to repay qualified student loans.
IDR Plans
An Income-Driven Repayment (IDR) plan is another option to consider. This plan bases your monthly payment on your income and family size, and the remaining balance on your student loans may be forgiven after a certain number of payments over 20 or 25 years.
Disability Discharge
If you have a disability that severely limits your ability to work, you may qualify for a Total and Permanent Disability (TPD) discharge. With a TPD discharge, you don't have to repay your federal student loans or complete certain grant service obligations.
State and Local Programs
In addition to federal programs, some states and localities offer loan repayment assistance or forgiveness for those who move to or work in their jurisdiction. These programs may be specific to certain careers, such as health professionals, public defenders, military members, or STEM workers.
It's important to note that these programs often have specific requirements and conditions, so be sure to review the details before applying. Additionally, the availability of such programs may change over time, so staying informed about the latest options is crucial.
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Tax-free student loan assistance
The number of companies offering student loan repayment benefits has been increasing. In 2019, only 4% of companies offered student loan repayment benefits, but this figure grew to 8% in 2019 and 14% in 2024.
Employers can provide tax-free assistance with employee student loan repayments. This is because the IRS does not consider the assistance provided by the employer to be taxable income for the employee. However, there are limitations and requirements for tax-free employer assistance in repaying student loans. For example, the maximum annual exclusion for educational assistance an employer provides per employee is $5,250. Amounts above this limit may be subject to tax as wages. Additionally, the educational assistance must be given under a formal, written educational assistance program sponsored by the employer, and it cannot favour highly compensated employees.
There are several different types of assistance that employers may offer. Some employers offer a lump-sum payment as a signing bonus when employees first start. Other employers make recurring payments to the lender on behalf of the employee. These payments can occur monthly, annually, or at some other interval. Some companies may even offer a lump-sum payment after an employee has been employed for a set period. In some cases, employers may include the assistance in the employee's paycheck, which can then be used to pay down their loans.
It is important to understand your employer's program before enrolling. For example, your company may require you to be employed for a set number of years before you are eligible, or it may offer to match your existing payments, in which case you may want to pay extra on your student loans to maximise this benefit.
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Student loan repayment program structures
The structures of student loan repayment programs vary depending on the employer and the specific program. Here are some common structures:
Signing Bonus
Some employers offer a lump-sum payment as a signing bonus when an employee first starts their job. This can be a significant incentive for individuals to join a company and can help attract talent.
Recurring Payments
Employers can make direct payments to the lender on behalf of their employees. These payments can be made monthly, annually, or at other specified intervals. Some companies may even offer a lump-sum payment after an employee has been employed for a set period.
Matching Contributions
Some companies may offer to match the employee's existing payments. This means that if an employee pays a certain amount towards their student loans, the company will contribute the same amount. This can motivate employees to pay more towards their loans to maximize this benefit.
Retirement Savings
In some cases, employers may offer to contribute to an employee's retirement savings if they use a certain percentage of their paycheck to pay off their student loans. This approach encourages employees to actively work towards reducing their debt while also planning for their future.
Vacation Time Exchange
At least one company allows employees to apply unused paid vacation time towards their student loan repayment. Instead of carrying over the time off to the following year, employees can use its monetary value to reduce their loan balance.
Service-Based Assistance
Some loan repayment programs are tied to specific career choices, such as military service or certain government agency positions. In these cases, employees typically receive annual payments or a lump-sum payment after completing the required service and meeting other program requirements.
It is important to note that the availability and structure of student loan repayment programs can vary across different employers and industries. Additionally, there may be eligibility requirements, such as the need to be employed for a set period before becoming eligible for the benefit.
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Frequently asked questions
Employers can offer student loan repayment assistance in a few different ways, including direct repayment programs or discretionary programs. Direct repayment programs involve employers putting cash payments directly toward an employee’s student loan through recurring payments or matching the employee’s contributions each month. Discretionary programs allow employees to allocate their company’s discretionary benefit dollars to student loan debt. Other types of assistance include signing bonuses, trading in PTO/vacation time, and contributions tied to retirement savings.
Under the CARES Act of March 2020, employers can provide up to $5,250 in annual student loan repayment assistance without tax consequences for the employer or employee. This amount is considered separate from an employee’s regular wages, but payments beyond this may be subject to payroll taxes. On average, businesses that offer student loan assistance start around $50 to $100 per employee per month.
Some well-known companies that offer student loan repayment assistance include Ally Financial, Chegg, Google, Fidelity, Hulu, Carhartt, and Freddie Mac.
You can check if your employer offers student loan repayment assistance by reviewing your employee benefits package or speaking with your human resources department. If your current employer does not offer student loan repayment benefits, you may consider looking for a new job with a company that does or suggesting it to your human resources manager.
