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Should employers offer student loan debt repayment as an employee benefit?

As many Millennials are struggling under the burden of debt, student loan debt repayment may seem like an ideal benefit for employers to offer to retain employees in today’s competitive market.

Millennials currently make up the largest segment of the workforce. With a reputation for driving change, it comes as no surprise that they are influencing employers to rethink the standard benefits package. In response to 83% of Millennials willing to change jobs for better benefits, employers have started to enhance their benefits package to recruit and retain top talent. New perks that are becoming increasingly popular include flexible work schedules, pampering for pets, and gym memberships.

However, as a generation that is carrying a much heavier debt burden than past generations, many are attracted to jobs that offer student loan debt repayment assistance as a benefit. In fact, “86% of employees would commit to a company for five years if the employer helped pay back their student loans.” That says a lot about a generation who, in addition to driving change, has earned a reputation for job hopping.

With more of the workforce demanding this benefit, why are more employers not offering it?

As of now, any amount of student loans that an employer pays for an employee, is taxable to the employee and is a business expense for the employer. In other words, if your employer pays for your student loans, the amount repaid becomes taxable to you as the employee. While up to $5,250 per year can be provided to employees tax-free as tuition reimbursement if the employee attends a qualified school while employed, the same rule doesn’t yet apply to student loan debt repayment. However, a bill was introduced earlier this year which, if passed, would permit employers to contribute up to $5,250 tax-free to help their employees pay off their student loans.

So, should employers offer student loan debt repayment as an employee benefit?

With such diverse expectations in the workplace, a one-size-fits-all approach to benefits is unlikely to continue satisfying employees. If employers are seeking a competitive advantage and can afford to offer student loan debt repayment assistance, it wouldn’t hurt to consider offering it as an option, especially if the proposed legislation is passed.

For now, as the demand for this benefit grows, both employers and employees are awaiting the outcome of the proposed legislation. Until then, any employer provided assistance will continue to be considered taxable income to the employee.


Millennials make up most of today’s workforce. As many of them are carrying a heavy debt burden, they are challenging employers to offer more competitive benefits, such as student loan debt repayment assistance. Although it may sound great to have your employer pay off your student loans, be aware that the amount repaid by them may be taxable to you as the employee. On the employer side, the amount they repay serves as a business expense.

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