Work Benefits

The Employer Participation in Repayment Act: FAQ

We believe that employer student loan repayment should be tax-free. The Employer Participation in Repayment Act would make this idea a reality. To help share more information about this bill and the impact it would have on solving the student debt crisis, we've put together this handy FAQ.

We'll update this list often with new information. Have a question that isn't answered here? Email us at info@debtfreetaxfree.com and we'll add it to the list.

What is the Employer Participation in Repayment Act?

The Employer Participation in Repayment Act is a bill in both the House and Senate that would make employer contributions to their employees' student loan payments tax free. Currently, more than 130 members of Congress in both the House and Senate support this bill.

Why does this issue matter?

Companies have increased the educational requirements for many jobs. That’s led more people to get more education, and that education costs more than it ever did before. In order to cover the cost of that education, people often take out student loans. Many companies want to help their employees pay back these loans. They know that if they help, they are more likely to get talented individuals to join their company and that those individuals are more likely to stay at the company longer. That is why 4% of employers already help their employees pay back student debt.

How would this bill help?

Today, if a company wants to put $100 towards your student loan every month, it actually costs them close to $110 (after payroll taxes) and you only get around $70 (after income taxes). The Employer Participation in Repayment Act would change that. It would make it so that an employer would only pay $100, and you would get the full $100, period. More affordable for companies, and more impactful for you.

How does the bill make student loan repayment tax free?

The bill itself is less than one page. It amends our tax code to define student loan repayment under the same tax-free protections as tuition reimbursement. Currently, your employer can reimburse you tax-free for paying tuition with your own savings, but they can't reimburse you for any loans that you took out to pay for your education.

Are both federal and private loans eligible?

Both federal and private loans would be eligible for employer student loan repayment. However, is up to your employer as to whether they would like to adopt this program.

If this bill passes, will my employer start making payments to my student loans?

While we can't promise anything, we can share that anecdotally, the fact that student loan repayment is currently taxed is a big reason why more companies aren't offering this benefit.

Will this bill require my employer to pay off my loans?

No, this bill does not require employers to adopt a student loan benefit. It is up to the discretion of the employer whether they choose to provide student loan repayment.

Which members of Congress currently support this bill?

You can find a full list of the House members that support the bill at this link. Here's a link to the Senate supporters.

How can I get my employer involved?

Share the email below with your human resources team:


Hi! I wanted to make sure you knew about a bill in Congress that would make employer payments to employee student loans tax-free. This is an issue that I care about. I’d love to see our company support employees who are paying back student debt by contributing directly to their loans. You can learn more about this
here.

Ready to sign the petition? Join us in making student loan repayment from your employer tax free.