Companies That Pay Off Student Loans

Student loan debt is causing many working Americans “significant” or “very significant stress,” according to a recent report. This shouldn’t come as a surprise.  Federal student loan debt reached a new high in 2020, for a total of $1.7 trillion. Millennials and Gen Z are carrying the brunt of this debt and they make up most of the current and near-future workforce.

National and global companies have recognized the toll that monthly student loan payments take on their employees. Some are willing to offer repayment assistance and tuition reimbursement to help them recruit top talent. Unfortunately, not all of these student loan repayment programs are as helpful as they might initially seem.

Ways A Company Can Pay Student Loans

Not all student loan repayment assistance is the same. Some larger national companies have created student loan repayment programs that vary depending on the benefits structure and human resource recruitment strategies involved.

Here are some common things you might see when evaluating these programs:

• Maximum Lifetime Benefits: A maximum lifetime benefit is the maximum amount of student loan debt that a company will pay on behalf of an employee. Usually, the company will let you know what the lifetime maximum is and pay it out by month. It’s common to see a $10,000 maximum lifetime benefit.

• Monthly Payments: A company might agree to pay a certain amount towards your student loan debt every month or every year without a maximum lifetime benefit. Student loan repayment programs without a lifetime maximum aren’t as common, but it might be something you can negotiate into your overall benefits package.

• Reimbursement Increases for Long-Term Employees: Reimbursement increases help employees who remain with the company for several years. This could be treated as a bonus after hitting a certain service period.

• Tuition Reimbursement for Employees Going Back: Many times, a company will agree to pay for one of their employees to go back to school. This kind of benefit is tuition assistance, so it’s not really a student loan repayment program. Companies invest in this kind of benefit because they encourage employees to earn another degree by removing some of the cost.

• Scholarships for Children of Employees: Some employers will offer college or university scholarships to children of employees. These programs are typically for employees who have a long tenure with their employer and they’re most common at universities and colleges.

Things To Consider About Student Loan Reimbursement Benefits

If you’re searching the job market, or if your employer is offering you student loan repayment assistance, you’ll want to make sure you understand how these kinds of benefits programs work. Most importantly, you’ll want to be able to tell whether any given repayment assistance program is really worth it.

Time Frame

First, you’ll want to be clear on how long you’ll need to work for the company before your employer will start helping you with repayment and also how long you’ll need to continue to work for the company after repayment begins to achieve maximum loan repayment assistance and to avoid repayment-related penalties, per the terms of the program.

Many companies will require you to work there for a certain period of time before you can become eligible for this benefit. The waiting period could be months, a year, or maybe several years. Some employers will also require that you stay at a company for a certain period of time after it starts the repayment benefit, otherwise it’ll make you pay the company back for any payments it made.

These types of requirements are meant to help companies with employee retention by providing them with long-term incentives. Depending on your future career plans, you may not want to stay at a given company as long as it wants you to. If that’s the case, this kind of incentive might not be the right plan for you. 

Part-Time vs. Full-Time Benefits

Aside from tenure (how long you’ve worked there), companies usually have different benefits packages available if you’re a part-time employee, as opposed to a full-time one. As with many other company benefits, the company may offer student loan repayment benefits only to full-time employees. Or they may offer reduced repayment benefits for part-time or seasonal employees.

Either way, before you make any big career decisions, make sure you find out which employees are considered eligible employees for a company’s loan repayment assistance program.

School And Subject Matter Limitations

Some companies place limitations on which school or subject matter they’ll help pay for. This kind of limitation usually applies when companies agree to help an employee go back to school while they remain employed. A company might have a relationship with a local school, it may want to pay for only accredited schools or programs, or it may only pay for courses or degrees that are related to the work the company does. After all, companies generally view this kind of assistance as an investment in their employees.

Taxes

Since this employment benefit is a part of your income, you’ll want to know how it will impact your taxes so that you don’t end up with a big tax bill at the end of the year. In the past, student loan repayment programs were considered taxable income and employees would have to pay taxes on the amount of benefit they received from their employers. In December 2020, Congress removed this limitation for employer contributions up to $5,250 per year. This means that any repayment amount up to $5,250 will be treated as tax-free for you. This provision is in place until 2025.

If the company plans to go above the tax-free maximum and you end up paying more in taxes as a result, you may want to consider restructuring your benefits package to avoid these tax obligations.

When It Comes To Repayment Assistance, Think “Big Picture”

Any repayment benefit is nice to have, but it’s important that you think about the big picture before committing to a course of action. This is especially true if you’re deciding between multiple job offers or a choice between a raise and a repayment benefit.

For example, if the company is offering to pay you $100 a month in reimbursement, it might sound nice, but that’s only $1,200 a year. For a full-time job, it comes out to less than $1 an hour. If this is a company’s best offer and another company is offering you a higher salary, it may be that the company without the repayment program is making the better offer overall.

The takeaway here is that it’s important to make sure that any given program is really worth it for you, especially if you are choosing between multiple options. Student loan repayment assistance is becoming more common and there are ways to structure them—some are just better than others. So, any time a company offers you student loan repayment assistance, keep the bigger picture in mind and consider it as part of your whole benefits package.

Examples Of Companies That Pay Off Student Loans

Some popular national employers have joined the group of companies that pay off student loans as an employee benefit. Nasdaq recently put together a list of 20 large companies that offer student loan reimbursement. This list includes giants in some industries: Aetna, Nvidia, Hulu, Carhartt, Peloton, Estee Lauder, Staples, Google, and others. Not surprisingly, many of the companies on the list are involved in financial planning and lending, including PricewaterhouseCoopers (now called PwC), SoFi, Fidelity Investments, and CommonBond. 

Many of these companies offer student loan repayment assistance as a part of their employee benefits package. Some are better than others, for example, Live Nation offers $100 per month with a $6,000 lifetime maximum, while Nvidia offers $500 a month for a $30,000 lifetime maximum.

It’s also worth noting that the US Government offers student loan repayment benefits, including public service loan forgiveness, which is discussed below. It also offers employees up to $60,000 in loan repayment, which is significantly higher than the average $10,000 maximum lifetime benefit offered by many private companies. 

The tradeoff with government positions is that they have strict promotion and compensation practices that limit how much you can increase your overall salary over time. It’s not like the private sector wherein you can renegotiate your salary and bonus every few years or leverage a raise with competing offers.

The Nasdaq list is not a complete list of companies offering employees student loan reimbursement, so don’t be discouraged if these companies aren’t potential employers in your field. And even if the company you’re looking to work for doesn’t offer this kind of reimbursement as a part of their standard employee benefits package, you can still try to negotiate repayment as a feature of your compensation. In fact, many people are successful in doing this, especially if they’ve already been with any given company for a few years.

Public Service Loan Forgiveness

Finally, even if you don’t work at a company that offers loan repayment as a perk or benefit, federal student loans can be forgiven if you work in a job that provides a public service.

The repayment program that provides for this kind of loan forgiveness is called the Public Service Loan Forgiveness (PSLF) program. It’s only available to people who work full-time for the federal government, a state or local government, or a qualifying nonprofit.

How PSLF Works 

To enter the PSLF program, you need to show that they work in a job that qualifies for the program. Specifically, you'll have to be employed full-time by the U.S. federal, state, local, or tribal government or a qualifying not-for-profit organization.

Also, the loans you want forgiven must be William D. Ford Federal Direct Loans (Direct Loans). Loans through the Federal Family Education Loan (FFEL) Program and the Federal Perkins Loan (Perkins Loan) Program don’t qualify. If you can consolidate those loans so that they become Direct Loans, then your loans will qualify.

Private loans don’t qualify either. Lots of private lenders offer student loan refinancing and consolidation, usually at a lower interest rate than Direct Loans. A lower interest rate might be helpful to you at the moment but be aware that if you decide to consolidate or refinance this way, you’ll no longer qualify for any of the federal loan forgiveness programs.

Once you’re approved for PSLF, you’ll need to recertify your personal and employment information every year to continue in the program. Borrowers who enroll in the program will have their loans forgiven once they make 120 qualifying payments.

Let’s Summarize...

Student loan debt is one of the great challenges young professionals tend to face, particularly Millennial and Gen Z Americans. If your employer or a potential employer is offering to help you pay them off, that’s a great benefit. But make sure you read the fine print so that you know what you’re getting into before making any big career moves.

Even if your company doesn’t provide this benefit, federal student loan borrowers do have other options for loan repayment, like the public service loan forgiveness program or other income-driven repayment plans.

If you haven’t decided how you want to repay your loans, don’t worry. You have time. Although student loan debt is at an all-time high, all federal student loans are currently in forbearance due to the coronavirus pandemic. This forbearance will last until at least September 31, 2021.

If you need help making a plan to pay off your student loan debt, you can speak with your student loan service provider. Your provider can help you find more information about what repayment options are available for you, just make sure they don’t stop at forbearance or deferment. If you have federal student loan debt, you have other options for repayment, even if the repayment amount is set to $0 for a little while.