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In recent years, there has been a growing trend for employers to offer their employees student loan repayment assistance as a benefit. Unlike tuition reimbursement (which has been around for years), student loan repayment assistance is a relatively new concept, but one that is gaining traction.
According to the Society For Human Resource Management, about 3% of companies offered some type of assistance program to help employees pay off their student debt. But one thing is certain: the number is growing.
Given that about 43 million people have student loans and the U.S. workforce is about 144 million people, that means nearly one in three workers has student loans. It just makes sense for employers to help their employees get out of student loan debt.
And according to a recent survey from LendingTree, 45% of employees would rather have a student loan repayment assistance program than a 401k. For younger employees (18-24), this figure is even higher at 54%. Even more surprising is that nearly 53% of workers would rather have help paying back their student loans than additional vacation time.
So let's dive in and see what this trend is all about.
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Covid-19 upgrades
Due to the coronavirus pandemic, employers are now permitted to use pre-tax dollars for employee repayment assistance up to $5,250. This provision applies until 2025.
This is a major tax break for both employers and employees who receive these funds. Previously, the employer's repayment assistance was considered taxable income.
Since this provision went into effect, we have seen a sharp increase in the number of companies offering student loan repayment benefits.
What is Student Loan Repayment Assistance?
Student loan repayment assistance is an employer benefit that is exactly what it sounds like: your employer will pay off (a portion of) your student loan debt.
Each plan is structured slightly differently, but there are some key themes:
- Amounts vary from $500 to $10,000 (perhaps even more), and some employers even offer these amounts annually
- Payments are sometimes made directly to the lender (so it's not a signing bonus and you may not get the money yourself, but you might)
There are also more creative programs, e.g. Such as making additional 401(k) contributions for those paying off student loans or allowing employees to cash out PTO days and send the money to student lenders.
Student Loan Repayment Assistance vs. Tuition Reimbursement
Before student loan repayment assistance, there were (and still are) tuition reimbursement programs. These are programs offered by employers that provide reimbursement for employees who go to school.
Typically, these programs require the employee to be an employee before starting school, pay for the program/course out of their own pocket, and the employer will reimburse all or part of the tuition paid.
These programs are beneficial for employees who need further training to advance, want to go back to school, employ many younger adults who may be considering school for the first time, or employ many non-traditional students.
However, for workers who have taken the “traditional” route of graduating from high school, pursuing a degree, and then entering the workforce, tuition reimbursement plans miss the mark. I think a lot of companies don't realize that they may be frustrating their employees because they see that this program exists, but they're stuck with their loans and can't take advantage of it.
Hopefully more employers will follow the companies listed below and offer student loan repayment assistance to their employees.
These companies offer student loan repayment assistance
We will continue to strive to update this list of companies. This is difficult because it is not always easy to find out who offers repayment assistance programs.
If you know of an additional program, please let us know in the comments so we can add it to this list.
Here are the companies that offer student loan repayment assistance and the amount they quote:
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Matching contribution of $2,000/year, up to $10,000 (half for part-time employees) |
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Paid at $100/month up to $10,000 |
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American Family Insurance |
Paid at $100/month, up to $10,000 |
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Pays $100/month for 5 years, then a flat rate of $6,000 after 5 years. Must work 20 hours per week or more. |
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Paid at $50 per month, lifetime cap of $6,000 |
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cell |
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Acts as a matching contribution |
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Paid at $100/month, with a 5-year cap of $5,000 and a $1,000 bonus in the 6th year |
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Pay $100 directly to the loan servicer. Must work 30 hours per week. |
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Paid at $100/month, up to $10,000. To be eligible you must work for 1 year |
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$2,000/year for up to 5 years |
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Starts at $100 per month in the first year of employment, $150 per month in the second year, and $200 in the third year and beyond. No cap. |
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20% of your student loan payment, up to $100/month. No cap. |
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Paid in addition to employee payments, no cap specified |
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Paid at $250/month up to $10,000 |
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Paid at $150/month, up to $10,000 |
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Paid at $100/month, maximum $6,000 lifetime |
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Paid at $200/month, no cap |
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Paid at $150/month, maximum $9,000 lifetime |
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Natixis Global Asset Management |
Paid at $83.33/month, up to $10,000 |
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Paid at $170/month, up to 5 years |
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Paid at $350/month, up to $30,000 |
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Paid at $100/month, maximum $9,000 lifetime |
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Paid at $100/month for up to 6 years |
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Price Waterhouse Coopers (PwC) |
Paid at $100/month, up to $10,000 |
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Paid at $100/month, up to $3,600 |
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Paid at $50/month, no lifetime maximum. Must earn less than $150,000 per year |
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Up to $10,000/year with a maximum of $60,000. Each department (DOJ, State, VA, SEC, DOD) has specific individual requirements |
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Some companies have partnered with lenders to offer special discounted interest rates for refinancing. We have not taken these into account here because refinancing a student loan is not for everyone.
Diploma
If your company offers a student loan repayment assistance program, you must take advantage of it. If this is not the case, you should ask your HR department or management to think about it.
Here's how to sell it. Many companies find this a great way to retain young talent. On the other hand, employers have the opportunity to reduce benefits that are not often used (such as a tuition reimbursement plan) and direct those resources to a more beneficial program.
Also consider contacting your US representative and encouraging them to make this a tax-free benefit. This would help you (the borrower) and probably encourage more companies to participate.
Regardless of whether your employer offers these plans or not, we hope to see more of them in the future.
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