Attract Young Talent While Repaying Their Student Loans Tax-Free [2024 Update]

For 2024, there are currently two ways employers can help employees with student loans.

Alternate to Retirement Savings [NEW FOR 2024]

The Secure 2.0 Act, legislation aimed at improving retirement benefits nationwide will allow employers in 2024 to start counting student loan payments as qualifying contributions toward retirement matching programs.

This means that if your business matches employee 401(k) contributions, your employees who are eligible to participate in your plan could get those loan payments matched without depositing those funds into your company’s retirement plan. Instead, the employee’s monthly student loan payment would count as their “contribution” and be eligible for the match.

Student Loan Assistance Payment Program

Employers can also offer student loan repayment assistance as an employee tax-free benefit for up to $5,250 annually. Employers are allowed to offer this tax-free benefit though 2025 based on the provisions in the Consolidated Appropriations Act signed into law in 2020. You can contribute more than $5,250 towards student loan debt, but the amount over $5,250 annually is treated as taxable wages. That amount will be subject to federal income and payroll tax withholding.