Employers will either offer student loan repayment on a taxable basis, or on a tax-free through a section 127 educational assistance plan.
A broad range of federal, private, and ex-US student loans qualify for contributions under taxable a student loan repayment plan unless specifically precluded by the employer’s policy. These loan types include:
- Direct Subsidized, Unsubsidized, Consolidation, and Grad Plus loans
- Stafford Subsidized, Unsubsidized, Consolidation, and Plus loans
- Perkins Loans
- Private Student Loans
- Direct Parent Plus loans
- Private parent loans
- Student loans guaranteed, or serviced by, non-U.S. entities
Some loans do not qualify for taxable student loan repayment. These loan types include:
- Co-signed loans, or any other loan where the employee is not the primary borrower on the loan
- Any non-student loan such as a personal loan, home equity loan, credit card, or other revolving debt facilities
- Defaulted loans that have been turned over to a collection agency
When an employer offers tax-free student loan repayment, parent loans and non-US loans do not qualify. You can learn more about the loans that qualify under a tax-free plan here.