Personal Finance

Boss wants to help pay your student loans? Sounds great, but there may be limits

Key Points
  • The average student loan balance is almost $30,000, with monthly payments between $200 and $300. 
  • More companies are adding student loan assistance as a benefit.
  • Expect caveats and taxes. 
Image Source | Getty Images

Student debt is leading job seekers to seriously consider positions at employers that offer loan repayment assistance as a benefit.

Outstanding education debt has outpaced credit card and auto debt. The average college graduate leaves school $30,000 in the red today, up from $10,000 in the 1990s.

Student loan assistance, which started as a niche offering by a handful of companies, is slowly finding its way into the mainstream menu of workplace benefits — although it's still not exactly widespread. According to the Society for Human Resource Management's 2018 Employee Benefits survey, 4% of U.S. companies have offered this benefit since 2016, up from 3% in 2015.

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Meanwhile, Republicans and Democrats in Congress have introduced legislation to make such student debt benefits tax-free. Depending on your employer, any help you currently receive could be considered taxable income.

Since the benefit is still in its early stages, each company has its own model. Many employers add caveats, including a minimum time you must have worked at the company to qualify or caps on how much you can receive in a year.

Here's how the benefit works at six companies:

Estée Lauder

People visit Estee Lauder booth on day two of the 2nd China International Import Expo (CIIE) at the National Exhibition and Convention Center on November 6, 2019 in Shanghai, China. The 2nd China International Import Expo (CIIE) is held in Shanghai on November 5-10. (Photo by Xu Congjun/VCG via Getty Images)
Xu Congjun | VCG | Visual China Group | Getty Images

The company offers a $10,000 lifetime maximum student loan debt contribution to employees who have been with the cosmetic giant for more than a year.

The incentive is broken down to monthly payments of $100. To be eligible, employees must be full-time, U.S.-based corporate employees, director level and below.

More than 1,000 employees participate in the program and around 80% of those enrolled are millennials, according to Madeline Jaeger, spokesperson for The Estée Lauder Companies.

Fidelity Investments

The student loan repayment program is offered to full-time and part-time employees who have been with the company for at least six months.

Employees who work 20 to 29 hours weekly can receive a maximum of $5,000, broken down into $1,000 a year. Those who work more than 30 hours a week may receive up to $10,000, with a yearly cap of $2,000.

"More than 10,000 Fidelity employees have saved $37 million in principal, plus $18 million in interest payments, since the program begin in 2016, with an average savings of $5,488 per person," said Kimberly Reingold, director of external communications for Fidelity Investments, in a statement to CNBC.

Chegg

James Tahaney loads textbooks on to a pallet in preparation for shipping at the Chegg Inc. warehouse in Shepherdsville, Kentucky, U.S., on Thursday, April 29, 2010.
John Sommers II | Bloomberg | Getty Images

The textbook company allows entry-level through manager-level employees to receive up to $5,000 a year in assistance, if they have been with the company for at least two years. Their employees with student loan debt also receive $1,000 cash every year.

Marc Boxser, vice president of communications and policy at Chegg, said he hoped to see the benefit become tax-free.

"Why are companies given incentives for continuing education, but not for supporting the education our employees have already undertaken and we benefit from?" Boxser said.

VIDEO3:3603:36
Chegg CEO Dan Rosensweig's plan to help pay employees' student loans

Abbott

The company has found a way to contribute to their employees' student debt burdens without giving them a tax bill.

Abbott matches student loan payments with contributions to its workers' 401(k) plan accounts. Research has found people with student debt face a harder time saving for retirement.

Blue Cross Blue Shield

Employees who work 30 hours or more for the insurer, and have been on the job for three months or more, are eligible. They can also receive financial coaching and help with repayment planning.

The one catch: Your student loans must be in good standing to qualify. (Nearly a third of student loan borrowers are behind on their payments.)

Peloton

Roberto Machado Noa

The fitness company contributes $100 a month to employees' student loans.

The plan does not have a lifetime limit as long as the employee remains U.S.-based and full-time.

— Disclosure: CNBC parent Comcast-NBCUniversal is an investor in Peloton.