Having trouble with student loans? Talk to your employer about getting $5,250 in tax-free assistance

For millions of Americans, student loan payments have become a permanent line item in the household budget. But before spending hours hunting for a new repayment plan or debt-relief program, there may be a simpler question worth asking: “Does my employer offer student loan assistance?”

You may not be aware, but thanks to a recent change in federal law, companies can continue helping workers pay down student debt with a benefit that is becoming increasingly attractive on both sides of the payroll department.

Can my employer help pay my student loans?

The short answer is ‘yes’. Let me explain.

Employers can contribute up to $5,250 per year toward an employee’s qualified student loans without the payment being treated as taxable income. That means workers receive the benefit without owing federal income tax on it, while companies avoid payroll taxes they would normally pay on additional compensation.

What was originally introduced as a temporary pandemic-era measure has now been made permanent, removing the uncertainty that had surrounded the program for several years. The annual limit will also be adjusted for inflation in future years, meaning the amount could gradually increase over time.

The money can be used toward both federal and private student loans, and payments can go directly to the lender or be reimbursed to the employee.

Could parents with education debt qualify?

This is a possibility.

Many parents took on debt to help children attend college, particularly through Parent PLUS loans and other education-related borrowing. Whether those loans can receive assistance depends on the specific rules established by the employer.

That’s why workers should not assume they are excluded. If your family is still carrying college debt, it may be worth asking HR exactly which loans qualify under the company’s program.

Why don’t more companies offer this?

The biggest obstacle isn’t the tax code anymore. To provide the benefit, employers must establish a formal educational assistance program and follow certain rules. For some businesses, especially smaller ones, that’s an extra administrative task and an added expense.

But the landscape may be changing.

Employers are increasingly competing for talent with benefits that go beyond salary, health insurance, and retirement plans. For younger workers burdened by education debt, loan repayment assistance can be more valuable than many traditional workplace perks.

Just remember: the benefit isn’t automatic. Your employer must choose to offer it so have a word.

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