Ask HR whether your company has an educational assistance plan that covers student loan payments. Through one, the company can put $5,250 a year toward your loans, and you owe no federal income or payroll tax on that money. If there’s no plan, ask for one.
Most companies don’t offer one, even though a 2025 federal law made the tax break permanent. A Society for Human Resource Management survey found only about 9% of organizations offered student loan repayment help in 2024.
The tax code calls it a Section 127 educational assistance program. Under one, your employer can send principal or interest payments straight to your loan servicer or reimburse you for payments you make. It covers federal or private loans for your own education, even ones from before you were hired, but not loans you took out for a child.
The tax-free cap is $5,250 for 2026 and rises with inflation starting in 2027. Any tuition the same plan pays counts toward it, which leaves less room for your loans.
Loan payments through the plan skip federal income tax and the 7.65% you’d pay for Social Security and Medicare. Counting just those federal taxes, at a 22% bracket, $5,250 through the plan is worth about $7,460 in extra salary. Count a loan benefit that way when you compare job offers.
A plan written only for tuition needs an amendment before it can cover loans, so ask HR for that change. With no plan in place, make the case for adding one. The IRS publishes a sample plan HR can adapt. The company also skips its own 7.65% payroll tax on the payments, so the benefit costs it less than paying you the same amount in salary.
Once your plan covers loans, enroll right away. Unused room under the cap doesn’t carry over to the next year, so a year without the benefit is tax-free money you never get back.
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