What Is Employer Student Loan Repayment?

These benefit programs put money from your employer toward your student loans.

Ryan LaneJanuary 4, 2021
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Employer student loan repayment is a benefit that some companies offer. Programs vary, but most put money directly toward your student loans — often $100 each month — over a certain number of years, or up to a lifetime maximum.

Employer assistance can help you pay off student loans fast. But before enrolling in this benefit or choosing a job for this reason, make sure you understand the ins and outs of the company’s program.

Types of employer student loan repayment

It’s somewhat rare for companies to pay student loans; pet insurance is almost twice as common as a benefit, for example, according to the Society for Human Resource Management.

Because employer student loan repayment is uncommon, there’s no standard program structure or rules. Here are some types of assistance a company may offer:

  • Cash payment programs. In these programs, your employer pays a fixed amount toward your loans on top of your existing payments. For example, Trilogy Health Services, which operates senior living facilities, pays $100 a month toward eligible workers’ loans.

  • Payment match programs. These are similar to cash payment programs, except your employer matches your payment amounts. For example, insurance provider Aetna matches up to $2,000 in loan payments annually for full-time employees. You may need to make extra payments to get the maximum benefit under these programs.

  • 401(k) match programs. Not sure if you should pay off student loans or invest? These programs aim to help you do both, providing a 401(k) contribution equal to your student loan payments. Defense contractor Raytheon Technologies offers such a program. Contributions are capped at an employee’s maximum 401(k) match percentage.

  • Swap programs. Some employers let you exchange other benefits for repayment assistance. For example, employees at the financial services company Fiserv can cash out internal reward points for money toward their loans. At the nonprofit hospital Montefiore St. Luke’s Cornwall, eligible employees can swap unused paid time off for a lump-sum loan payment.

Employer student loan repayment programs are typically administered via a third party, such as IonTuition, Tuition.io, Gradifi, Fidelity Investments and Peanut Butter, that pay your student loan servicer directly.

Your employer may also partner with these providers for non-monetary services or additional features, like student loan counseling and refinancing bonuses. If you’re considering refinancing student loans, be sure to compare multiple lenders’ offers to get the best deal possible.

Is employer student loan repayment taxable?

You don't have to pay taxes on up to $5,250 in annual employer student loan repayment assistance. This tax break was introduced in the Coronavirus Aid, Relief, and Economic Security Act and later extended through Dec. 31, 2025.

Prior to March 27, 2020, taxes were taken out of individual employer student loan repayment contributions and the total you receive was added to your taxable income. These rules will resume after Dec. 31, 2025 absent additional legislation.

What’s the catch with employer repayment programs?

Besides potential tax implications, employer student loan repayment programs are essentially free money that can speed up your loan payoff date.

For example, say you owed $30,000 at 6% interest. By receiving $100 a month from an employer, you’d finish repayment almost three years earlier and save $3,155 in interest, assuming a 10-year repayment term.

Still, before enrolling in an employer student loan repayment program, you’ll want to understand all of the program’s features. Here are some questions to ask yourself:

  • Is there a service commitment? Memorial Hermann, a Southeast Texas-based health system, offers $400 a month to eligible clinical staff but requires a two-year commitment after the final payment.

  • When are you eligible? At Florida-based Coastal Construction, workers can receive up to $150 a month, based on tenure, but must be with the company for a year before they qualify and even longer to get the maximum benefit.

  • Do your loans qualify? ProService Hawaii, an HR management firm headquartered in Honolulu, pays $100 per month, but loans must be for the employee’s education; parent loans are ineligible.

If you’re weighing job offers, look at the entire benefits package — not just whether the employer offers loan repayment assistance — to determine what will affect your life most.

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