Frequently Asked Questions

Tax-Free Benefits

Yes, and we recommend also providing it to employees. It will help them fully understand how their distribution might affect their employer match contributions between retirement plans and student loan debt repayments. There are different tax consequences for each.

SECURE Act 2.0

Yes, beginning in 2024, this optional provision allows for employers to make matching contributions to an employee's 401(k) plan, 403(b) plan, or SIMPLE IRA based on qualified student loan payments. Employers may make matching contributions to both elective deferrals and loan payments, but not in excess of the regular matching contributions that are available in the plan.

To receive the match, an employee must annually certify to the employer that Qualified Student Loan Payments (QSLPs) have been made. SECURE 2.0 allows employers to rely on the employee’s certification without substantiation. However, the statute directs Treasury to issue regulations allowing employers to establish reasonable procedures for employees to claim the QSLP match. Those regulations could allow employers to require substantiating documentation.

  • A QSLP matching contribution can only be provided to employees eligible to receive a match on their elective deferrals.
  • All employees eligible to receive a matching contribution on their elective deferrals must be eligible to receive a matching contribution on their QSLPs.
  • The plan must match elective deferrals and QSLPs at the same rate.
  • A QSLP matching contribution must vest in the same manner as the match on elective deferrals.
  • Match frequencies can differ, as long as the QSLP match is made at least annually.

The maximum amount of loan payments that can be treated as QSLPs in any year is capped at the applicable elective deferral limit under Section 402(g) of the Internal Revenue Code of 1986, as amended (e.g., $22,500 for 2023) or, if less, the amount of the employee’s compensation for purposes of applying the Code Section 415 annual additions limit. Keep in mind that this maximum amount is reduced by any elective deferrals that an employee contributes to the plan. The combination of the employee’s elective deferrals to the plan and the QSLPs may not exceed the Code Section 402(g) elective deferral limit.

The matching contributions must satisfy certain nondiscrimination testing requirements, but SECURE 2.0 established relatively favorable rules in this regard. In particular, (1) QSLPs may be treated as elective deferrals for purposes of determining whether nondiscrimination testing safe harbors are satisfied; (2) as a plan feature, matching contributions on QSLPs generally will be treated as being available to all participants, including participants who do not have outstanding student loans; and (3) plan sponsors may apply the annual deferral percentage tests separately to those participants who receive matching contributions on account of QSLPs.

Employee loan deductions go directly to the servicer of the student loan payment. The employer match portion goes to the employee’s retirement plan account.

When does it make business sense to add student loan match for recruitment and retention?

  • When retention is an issue or hiring is very competitive, student loan match can save an employer on recruitment, hiring, and training costs. At BenefitEd, we’ve seen up to 30 times the retention versus control groups when student loan match programs are added, depending on how severe an employer’s retention issues are.
How many employees may take advantage of student loan match?
  • Again, depending on the makeup of your employee base, we expect that approximately 5 to 10% of employee participation in a student loan match may be typical for most employers.
What is the cost to the employer for program administration of a student loan match program?
  • Most retirement match plans are typically already budgeted for by the employer. Administrative costs are typically $5 per person, per month.

Student loan debt impacts millions of Americans, ranging across all ages and demographics – from Gen Z through baby boomers. Explore how this issue impacts American workers and how employers can use SECURE Act 2.0’s student loan match to make a difference.

Program Implementation & Integration

Any employee can be eligible. We’re happy to help with questions related to their student loans – and to help them balance student loan repayment with their other financial goals and needs.

For employers who partner with BenefitEd to offer one or more of our programs, Support Solutions is free to their employees. This service also available at a nominal fee for other employers who wish to provide this valuable service at no cost to their employees.

Nelnet Bank’s mission is to help families achieve their dreams with financial knowledge and access to education. For employees who can benefit from student loan refinancing, working with a trusted partner like Nelnet Bank can save them money in interest over time and simplify student loan repayment.

Yes, and we recommend also providing it to employees. It will help them fully understand how their distribution might affect their employer match contributions between retirement plans and student loan debt repayments. There are different tax consequences for each.

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs. These qualified tuition plans are sponsored by states, state agencies, or educational institutions and receive tax benefits under Section 529 of the Internal Revenue Code. Learn more about 529 college savings plans.

Employees must open a 529 plan before this benefit can be applied. Employers can offer their contributions to all or any specific subset of employees.

By investing in their employees’ growth and development, employers can help increase retention and reduce turnover. This benefit also helps employers promote more talent from within, instead of outside talent – helping their bottom line.

BenefitEd acts as a third-party administrator of the program, freeing up valuable company time. Employers can be confident their tuition reimbursement program will be handled smoothly, while employees can focus on more important work.

Employers can choose their own criteria to determine which employees are eligible.

You can change or amend a program with us as often as you would like.

The hours vary from fully automated programs to about one hour per month.

Some employers have reduced their turnover rates by over 66%. We have many ROI studies we can share to support BenefitEd program results, too. If you’d like to review these success stories, don’t hesitate to contact us.

Any employer can offer it to any employees who have student loan debt, or to a specific subset of employees. For example, an employer could offer student loan repayment to attract and retain talent in certain positions that require specialized training or where recruitment is more difficult.

Your name, employee ID, name(s) of your loan servicer(s), and your student loan account number(s). You’ll also need the loan servicer payment address, which can be found on your student loan statement.

You’ll obtain a link from your employer to create an account and start an application for the program. This is a two-step process. Submitting the application is just the first step.

Employee & Employer Contribution

This depends on how the employer sets up their program. Employers can set a program up to pay once or twice monthly, quarterly, or annually.

Yes, we can. However, for most employer programs, Parent PLUS loans are not eligible.

For most 529 college savings plans, there’s usually not a required minimum or monthly contribution. Employer contributions will supplement savings from contributions made by the employee.

Federal and private student loans that are in your name (not a parent or guardian’s) qualify to receive payments. Private student loans must be with a student loan provider rather than with a personal bank. International student loans do not qualify under this program.

The contribution amount varies by organization, based on their budget. We see contributions from $25 to $1,200 per month. The most common is $100/month.

No. They are separate and distinct benefit plan programs. However, you may distribute the employer contributions between the two programs and implement a cap by aggregating total employer contributions within both offerings. The retirement plan participation and related employer match are separate from Employee Choice and the related student loan repayment offering.

Yes, and we recommend also providing it to employees. It will help them fully understand how their distribution might affect their employer match contributions between retirement plans and student loan debt repayments. There are different tax consequences for each.

Employee Choice will not affect your retirement plan or its qualification as a safe harbor plan. Any employee contributions directed to the retirement plan will have a company match, in accordance with your retirement plan documents. If you offer Employee Choice and there are company match dollars available to be contributed to the Student Loan Repayment program, they will be deposited accordingly.

Eligibility requirements vary for our programs. They’re established by your employer. You’ll receive an email with a link to the sign-up page where you provide basic student loan or 529 plan information and determine which accounts will receive contributions. You’ll need your employee ID, name(s) of your loan servicer(s), and your student loan account number(s).

If your employer offers this benefit, they pay a portion of your remaining student loan debt in addition to the amount you pay on the loan. You continue to make payments according to the terms of the loan. A student loan repayment program is free money you’re not taxed on, paid directly to a loan.