Are Your Clients Overlooking the Tax-Free EAP Student Loan Repayment Assistance Option?

by Prof. Robert Bloink and Prof. William H. Byrnes

Student loan repayment assistance has become a hot topic in recent employment benefits discussions. Under the SECURE Act 2.0, employers are now entitled to make matching contributions to an employer-sponsored retirement plan based on an employee’s qualified student loan payments. Still, the option is extremely new—and many employers have declined to offer the benefit as of yet due to concerns about getting the program right. Employers who are hesitant about offering the new student loan matching benefit may be interested in an option that’s been available for some time—the educational assistance program (EAP). While EAPs have historically been used to offer tax-preferred assistance for tuition costs, employers are currently able to offer student loan repayment assistance via the EAP structure (for a limited time only). The rules governing EAPs are complex, but these programs can offer a powerful benefit option when implemented properly.

EAPs: The Basics