How to Ask Your Employer to Pay Your Student Loans

  • The CARES Act allows employers to contribute $5,250 a year to each employee’s student loans.
  • Student loan repayment assistance is a new workplace benefit offered by some companies.
  • You can use this simple email template to encourage your employer to start offering it.

It’s safe to say that student loan debt is one of the biggest financial burdens Americans face today.

According to The Education Data Initiative, the average student loan payment is $460 per month and it takes the average borrower 20 years to pay off debt. Additional data from the federal student loan portfolio shows that 63.9 million borrowers under the age of 61 owe a total of $1.4 trillion in federal student loans.

But your employer may be able to offer you some relief.

Your employer can pay $5,250 a year directly from your federal student loans

At the start of the pandemic, the CARES Act was passed to quickly get Americans economic relief, including stimulus checks and money for small businesses. But one section of the legislation hasn’t gotten as much attention: Section 2206, which allows employers to make up to $5,250 in tax-free annual payments directly from their employees’ federal student loans.

Employers could offer this kind of benefit long before the pandemic. According to the SHRM Employee Benefits Survey, 8% of companies nationwide offered student loan repayment assistance in 2019 and 2020. The main difference under the CARES Act is that employer contributions are completely exempt. of tax. This means that employees will not pay tax on this additional “income” and employers will not owe payroll taxes on these funds.

The CARES Act was only supposed to be in place for 2020, but under the Consolidated Appropriations Act of 2021, Combined Spending Bill, and ongoing coronavirus relief funds, this provision has been extended until as of December 31, 2025.

Joseph P. Yonadi, Jr., tax and benefits strategy attorney at Squire Patton Boggs LLP, says annual student loan repayment assistance of $5,250 is an added benefit on top of salary, insurance an employee’s health and retirement benefits, which means it’s not money that comes from your paycheck – it’s your employer’s money that goes directly to your loans.

Sometimes benefits such as stock options are only available to higher-ranking employees who have been with the company longer. Student loan repayment assistance is, however, available to employees regardless of rank and salary.

Yonadi says, “The costs of education have skyrocketed over the past 10 to 15 years. It’s a benefit for employees because it alleviates some of that burden, and it’s also a benefit for employers, for retention.

Due to normalized job change during the Great Resignation, employers are struggling to find ways to keep employees happy and loyal to their company. Student loan repayment assistance could certainly be a good incentive for employees to stay with the company longer.

Yonadi adds, “We in the industry are hoping that this benefit will stay forever and they will hopefully increase the limit to $5,250.”

Some companies offer a 401(k) match to pay off your student loans

Outside of federal politics, tech companies have created solutions for employers to provide this benefit to their employees.

For example, the benefits platform Vault makes it easy for employers to contribute between $50 and $500 per month towards employee student loans. Vault even offers a 401(k) matching program where employers can contribute a matching dollar amount based on how much employees are paying on their student loans. The 401(k) matching program rewards employees for repaying their student loans and encourages them to repay their loans quickly by contributing more to the employee’s 401(k).

Vault co-founder Tony Aguilar said, “One thing we’ve seen is that employees, if they ask for it, it’s something that HR and the business feel they need to provide. Current employees and people who It’s a constant thing that keeps coming back, we have this new workforce that’s just asking and forcing that benefit, which is great to see.

Ask your Human Resources department about student loan repayment assistance using this email template

When it comes to asking your employer for this benefit, Yonadi recommends being open and transparent. He adds, “You can just say, ‘I’m in some debt because of this education that you require of me for this position. I want to save for retirement and pay off my debt in a reasonable time frame. How can you help me?'”

If you would like to ask your employer to consider offering student loan repayment assistance, here is an email template you can use:

Expensive _______,

I recently learned that employers may offer student loan repayment assistance as an added benefit.

Section 2206 of the CARES Act states that employers can make tax-free payments of $5,250 per year directly from each employee’s federal student loans. This was only due to be in place in 2020, but has been extended to December 31, 2025 until Section 120 of the EE Division in the Consolidated Appropriations Act of 2021. A summary of the provisions can be viewed here on the National Law Review website.

Personally, I have (insert total federal loan) in federal student loans and my monthly payments are (insert monthly payment). I’m sure I’m not the only one feeling the pressure of student debt, so I wanted to speak up and advocate for the needs of the employees at this company.

Will be (insert company name here) consider offering this benefit in the future?

Better,

(your name here)

Learn about student loan repayment assistance during a job interview

If you’re interviewing for a new job, be sure to ask your potential employer the following questions:

  • Do you offer student loan repayment assistance benefits?
  • If they don’t know about student loan repayment assistance benefits, you can add: Under Section 2206 of the CARES Act and Section 120 and EE Division of the Consolidated Credits Act , employers can make tax-free contributions of up to $5,250 per year to students. loans. Do you offer this in the future?
  • What other benefits do you offer people with student loan debt?


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