Work benefits

Tax-Free Student Loan Contribution is a Major Win for U.S. Employers and Employees

Good news has come to the more than 44 million Americans paying back their student loans. Congress has passed the Consolidated Appropriations Act in response to the Covid-19 crisis:

The bill extends a provision that allows employers to make tax-free contributions to employee student debt for the next five years.


Previously, contributions that an employer made toward their employee’s student loans were subject to both payroll and income tax, which was a barrier to widespread adoption by employers. These taxes also reduced the total contribution amount that an employee received. For example, if an employer paid $100 towards an employee’s student loan every month, it cost them nearly $110 after payroll taxes and the employee would receive only $70 after income taxes. Today, if an employer pays $100 towards an employee’s student debt, the employee will receive the full $100.

"We have been delighted to partner with CommonBond over the past several years to offer PURE employees a student loan debt repayment program, which contributes on a monthly basis to pay down the principal of outstanding student loan debt that many of our employees are burdened with,” said Joanna Stein Weiner, AVP, Compensation and Benefits at PURE Insurance. “The extension of the tax-free status of employer contributions toward debt repayment will help our contribution go even farther and will enable employees to pay down their student loan debt even faster,” added Stein Weiner.


This legislation not only is a boon for employees with student debt, but it is also a tool for employers who want to attract and retain top talent. Survey data shows as many as 77% of employee respondents consider their benefits package when accepting a job offer, and 83% say benefits influence their decision to stay at a company.


CommonBond, along with other providers of student loan benefit programs, have been actively working over the last several years to make student loan contribution tax-free, organizing the “Debt Free, Tax Free” advocacy campaign ( The passage of this bill represents a major milestone and victory for this movement.


Organizations looking to offer student loan contribution should partner with a student loan benefits provider like CommonBond and Empower who specialize in designing and delivering student loan benefits.


“Student loan debt is a burden to millions of people and studies show that many borrowers are not fully contributing to their retirement plans, which could have a long-term impact on their overall financial wellness,” said Tina Wilson, Chief Product Officer for Empower Retirement, a provider of retirement services to 12 million Americans. “By partnering with CommonBond we are creating actionable solutions for employers and their employees.  We look forward to helping more of our clients adopt employer contributions to student debt in order to take advantage of the extended tax-free treatment.”


“With this new tax provision, we are confident that this new legislation will allow more employers to help their employees pay back their student loans and achieve financial success. Someday soon a meaningful student loan benefit will be the norm for competitive employers, similar to the adoption curve for 401K benefits in the past,” said CommonBond’s President Robb Granado.


We encourage all companies, large and small, to learn more about student loan benefits and how to make them work at their company. Send an email to to get started.

Source: The Missing Benefit in Financial Wellness, 2018        

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