As the burden of student debt continues to grow, more employers are stepping up to support their workforce with innovative student loan repayment benefits. But not all programs are created equal. Understanding the different types of employer-sponsored student loan repayment benefits can help both employees and employers choose the right approach for their needs.
Student Loan Employer Contributions
Employers make periodic contributions directly toward an employee’s student loan balance, usually sent straight to the loan servicer. These contributions reduce the principal faster and can help employees pay off debt years ahead of schedule.
Key Features
- Typically capped at a certain annual or lifetime maximum.
- Encourages long-term financial wellness.
Matching Contributions with Retirement Plans
Some employers offer student loan repayment support through their 401(k) or other retirement plans. Employees who make student loan payments may qualify for employer matching contributions to their retirement account — helping them tackle debt without sacrificing retirement savings.
Key Features
- Helps employees who can’t afford to contribute to retirement while repaying loans.
- Encourages long-term financial wellness.
- Through the SECURE Act 2.0, IRS guidance now allows for more formal implementation of this benefit. (Source: Office of the Law Revision Counsel)
How the SECURE Act 2.0 Creates New Opportunities
The SECURE Act 2.0 allows employers to treat employees’ qualified payments toward student loan debt as if they were 401(k) contributions for matching purposes. Prior to this change, people often missed out on employer match opportunities because they had to prioritize repaying their student loans over funding their retirement accounts. Employees can pay off their own loans (or a spouse’s or dependent’s loans) while also receiving their employer retirement match.
Tuition Reimbursement Programs
While technically not a repayment benefit, many employers offer tuition reimbursement for employees pursuing further education. This can reduce the need for future borrowing and is often part of a broader education benefits strategy.
Key Features
- Often capped annually.
- Sometimes requires continued employment for a period after reimbursement.
- Supports upskilling and career development.
- Tax-free when included as part of an Education Assistance Program (EAP).
- Pairs well with student loan employer contributions and allows you to be more inclusive of your employees.
Student Loan Counseling and Financial Wellness Tools
Some employers offer access to counseling services, financial planning platforms, or loan management tools to help employees better understand and manage their student debt.
