There are many different programs to help student borrowers pay off debt faster, but aside from student loan forgiveness programs, student loan repayment assistance programs can be the most effective.
These programs, offered by government agencies and private employers, can provide hundreds or even thousands of dollars in assistance to borrowers each year. Understanding how they work and how to qualify can help you achieve your goal of becoming debt free.
How Employer Student Loan Repayment Benefits Work
Student loan repayment as an employer benefit has grown in popularity. Although there have been government programs for a long time, it was not common among private companies until recently.
According to Human Resource Management Companyjust 8% of companies offered a student loan repayment benefit in 2019. In 2021, that figure rose to 17%, with 31% of companies planning to provide it in the future, according to a report by the Employee Benefits Research Institute. This is likely due to new laws encouraging student loan repayment assistance.
Companies can structure their programs in different ways, but the primary focus is to provide lump sum payments or recurring payments, either directly to your student loan providers or to you as an employee.
Types of student loan repayment assistance from an employer
There are several types of aid that you can benefit from, depending on the employer of your choice:
- Signing bonus: Some employers offer a lump sum payment as a signing bonus when you start in the business.
- Recurring payments: With platforms like Gradifi, employers can make direct payments to your lender on your behalf. These payments can occur monthly, annually or at some other interval. Some companies may even offer a lump sum payment after being employed for a specified period. In some cases, employers may include assistance in your salary, which you can use to repay your loans.
- Service-Based Support: If you are in the military or your career qualifies you for a loan repayment assistance program offered by a government agency, you will usually receive annual payments or a lump sum payment after you provide the required service and meet other program requirements.
- Linked to retirement savings: Employer pension contributions are often tied to the amount the employee is setting aside for retirement. But in some cases, an employer may offer to contribute to your retirement if you spend a certain percentage of your salary on student loans instead.
- Redeem your unused leave: At least one company is allowing employees to apply a portion of their unused vacation pay to their student loans instead of carrying it over to the next year.
How employer student loan repayment is taxed
In the past, student loan repayment assistance payments were considered taxable income for employees and were subject to payroll taxes. But when the CARES Act passed in March 2020, it allowed employers to provide up to $5,250 in annual student loan repayment assistance with no tax consequences to the employer or employee. The Consolidated Credits Act extended the tax relief until 2025.
Note, however, that the $5,250 limit is a combined limit that also includes tuition assistance programs.
If you receive assistance from a government program, you may not have to pay tax on the assistance you receive. Such is the case with the National Health Service Corps Loan Repayment Program, which offers up to $50,000 in payments over two years. Check the program you are applying to to see if taxes will come into play.
How to Access Student Loan Repayment Benefits from an Employer
If you work for a private employer that offers student loan repayment assistance, you may need to stay with the company for a set period of time before you qualify, but some companies offer the benefit upfront.
If your current employer doesn’t offer this benefit, you might consider pitching the idea to your HR manager or researching a company that does.
Alternatively, you may be able to access student loan repayment assistance programs through a federal or state government agency depending on your career choice. For example, medical professionals, public defenders, military, and STEM workers may be eligible for Loan Repayment Assistance Programs (LRAPs). Research online to find out if there is a government program for your profession and if you qualify.
Which companies offer student loan repayments?
More and more private companies are beginning to offer student loan repayment assistance programs, so it is difficult to provide an exhaustive list. But here are some great companies that offer this benefit:
- Anderson Global.
- Campus Philly.
- Connelly Partners.
- Bank of the First Republic.
- Freddie Mac.
- Large wind.
- Godard school.
- Long live the nation.
- Millennium Trust Company.
- Natixis Global Asset Management.
- New York Life.
- Random penguin house.
- Public preparation.
- Pure insurance.