Ask a counselor: How can I find my job to pay off my student debt?

Welcome back to “Ask an advisor“, the advice column where real financial professionals answer questions from real people. The topic can be about anything in the world of finance, from retirement to taxes to wealth management – or even counseling advice.

For Americans with student debt, the last four years have been a roller coaster.

First there was a Break in the Covid era on student loan payments – but that has expired. Then President Joe Biden signed an executive order authorizing $430 billion in student debt — but the The Supreme Court overturned it. Then Biden presented the SAVE Plan (Saving on Valuable Education)which made repayment cheaper for millions of borrowers – but federal courts blocked it and the Supreme Court refused to save it.

But for some borrowers, a lifeline remains available: education assistance programs (EAP). This benefit is not offered by the Biden administration, but by the IRS, and is not paid by the government, but by employers.

Under the U.S. tax code, employers can choose to pay their workers’ education expenses – including student loans – and that money is not taxed. For a borrower, that could mean up to $5,250 a year in loan payments, either as part of their salary or on top of it. Even though the money is subtracted from their salary, it’s a better deal for the employee because it goes directly to their loans without being impacted by income taxes.

LEARN MORE: Student debt prevents Americans from saving for retirement

But that’s only if the company offers it. A borrower in New York wants to persuade her employer, a law firm, to provide this assistance. And like a good lawyer, she does her research before making her case – by talking to financial advisors.

Here is what she wrote:

Dear advisors,

I have significant student debt and I think I’ve found a way for my employer to help me, but I still have to sell them.

I’m a lawyer in New York and recently learned about education assistance programs. Using one of these programs would help me pay off my loans faster and it wouldn’t cost my business much to implement.

My question is: what are the benefits for an employer like mine – a limited liability company (LLP) – of enrolling in such a program? I want to persuade my company to offer this benefit and I need all the information I can get. Or is there something better than an EAP that I should consider?

Thanks in advance!

Sincerely,

Mired in Manhattan

And here’s what financial advisors said: