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Student loan debt

How to Help Employees with Student Debt

Student debt is the second highest debt category in the U.S., only falling behind home mortgages. More than 43 million Americans have student loan debt, averaging nearly $38,000 per borrower. Borrower ages range from recent graduates to retirees. High debt loads mean older borrowers are unprepared for retirement, while younger borrowers have to delay life milestones such as homeownership and starting a family. 

What can employers do to help? By offering student loan benefits, employers help their employees reduce debt and make progress toward their life goals, while also benefiting the company by encouraging employees to stay long term. PwC reported on their student loan program saying, “Five years after we instituted the SLP [student loan paydown] benefit, it remains a win-win…Our internal research shows that the difference is meaningful. We find that our benefit is associated with both retention and higher employee engagement. And we’ve seen the impact that this benefit can have on a broader scale, helping our people to save for a first home, start a family, or support other investment goals.” There are many ways companies can implement student loan benefits, including contribution plans, repayment assistance, refinancing, and education.

Student Loan Contribution Plans

Student loan contribution plans operate in a similar manner to 401k plans. In these plans, contributions are automated, which removes the opportunity (or temptation) for the employee to spend the money elsewhere. CNBC states, “Like retirement contributions, these programs allow employees to dedicate a percentage of their paycheck toward student loan repayment with a match from their employer.”

Similarly, the SECURE 2.0 Act of 2022 allows employers to “match” a student loan payment in the form of a 401k contribution. Nerdwallet explains, “Beginning in January 2024, employers can treat ‘qualified student loan payments’ as contributions to a retirement savings plan — meaning an organization can match all or a portion of the student loan payment and deposit that money into an employer-sponsored retirement plan, like a 401(k).” Employers who adopt programs such as these can make a significant difference in an employee’s ability to pay off student loans and save for retirement. This is especially beneficial for those employees who must otherwise choose one or the other.

Repayment Assistance

Thanks to the CARES Act, businesses can make student loan contribution payments of up to $5,250 tax-free per employee per year through 2025. These contributions are tax-free for both employee and employer and can help employees manage student debt. There are a number of ways employers can make these contributions, including the following:

  • Signing bonus. Offer a lump-sum payment as a signing bonus when employees first start at the company.
  • Recurring payments. With platforms like Gradifi, employers can make direct payments to lenders on behalf of employees. These payments can occur monthly, annually, or in some other interval. 
  • Service-based assistance. Military and certain government agencies typically provide annual payments or a lump-sum payment after employees or service members have provided the required service and met program requirements.
  • Vacation time exchange. Employers can allow employees to apply some unused paid time off toward their student loans instead of carrying it over to the following year.

Refinance Partners

Employers can partner with refinance loan lenders to grant employees the opportunity to refinance their student loans. This can be particularly beneficial for holders of advanced degrees, such as law or medical degrees, as they typically qualify for refinancing. Refinancing could also grant the borrower a principal credit reduction. Since many borrowers don’t fully understand the options available to them, employers who partner with such a lender give more employees the opportunity to take advantage of refinancing options.

Loan Education

Providing education on financial matters such as loans, credit scores, financial planning, and repayment options is one of the most valuable things employers can do for their employees. An article from CNBC states, “There are many ways to help employees manage and pay down student loan debt. The first is through financial education resources and empowering employees with knowledge…This is one of the most cost-friendly ways for an organization to help and includes sharing financial education resources, updates and guidance on student loan policy, budgeting tools like a student loan calculator, and access to financial planners.”

Education is critical in properly managing money and paying off debt. Through education, employees can learn about options for paying down student loans, such as the SECURE Act which allows individuals to withdraw up to $10,000 tax-free from a 529 plan to make student loan payments. SoFi states, “Any effort employers can make to educate their workforces about this important change can enhance their overall student debt and financial wellness programs.” Education can also help employees understand the importance of increasing their credit score and how to do it. Beyond that, financial education can also help employees manage their paychecks, invest wisely, and prepare for the future.


Employers have the opportunity to make a big impact on their employees’ financial lives, beyond providing a paycheck. By helping employees manage their student loans, employers not only reduce financial stress related to debt, but help their employees reach life milestones that would otherwise be delayed. In doing so, employers benefit their companies as well, as student loan benefits have proven to increase retention rates among employees and improve engagement within the workplace.

Find out how 101 Financial’s Workplace Wellness program helps employees understand and manage student debt.

Sources: Paycor, Harvard Business Review, Bankrate, Citizens Bank, SavvyFi, SoFi