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The Role of Employer Repayment Programs in Tackling Student Loan Debt

In 2019, total student loan debt in the United States equaled $1.5 trillion, a more than five-fold increase from 2003 levels. The average college senior who took on student loans now graduates with over $29,000 in debt. Meanwhile, recent graduates with student loans may need to work anywhere from two to seven years longer to reach the same levels of retirement security as those without debt. And this is more than just a challenge for young people: roughly one out of every five student loan dollars is owed by someone age 50 or older.

In response, from the federal government to the private sector, student loan repayment programs are a modest but emerging offering for employers looking to attract and retain workers with student debt burdens—and some workers may see significant gains. Programs’ eligibility requirements, generosity, and conditions all vary from employer to employer. In addition to employers who make student loan payments directly, some have adopted alternative approaches to this employee benefit: enhanced retirement account contributions for employees with student loan debt, and partnerships with student loan navigators to help borrowers find the best repayment strategy.

The ultimate financial benefits for employees receiving student loan repayment assistance from their employer will vary based on several factors, including their debt and income levels as well as the potential tax consequences of assistance. Further research will be needed to determine the effectiveness of these programs in the long run, either in alleviating student loan debt or in serving as an employee-retention tool.


Suggested citation:

Valenti, Joe. The Role of Employer Repayment Programs in Tackling Student Loan Debt. Washington, DC: AARP Public Policy Institute. May 2020.

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