Trump's stimulus created an incentive for your boss to pay up to $5,250 of your student loans annually

Wellesley College graduation — Wellesley College/Facebook

Trump's stimulus created a tax-free incentive for employers to help pay off workers' student debt.
It allows employers to pay up to $5,250 annually on workers' student loans through 2025.
Some CEOs say corporate America should take part and help employees manage the cost of education.
See more stories on Insider's business page.

While only federal student loans are part of the broader debt cancellation conversation, President Donald Trump's CARES Act passed in March 2020 gave employers an incentive to pay off student debt - both federal and private loans - for their workers.

In December, the Trump administration extended through 2025 a provision of the CARES Act that allows companies to pay off up to $5,250 of their employees' student debt annually on a tax-free basis, meaning that payments would be excluded from payroll and income taxes for both the employee and the employer.

Before the pandemic, about 8% of companies offered student debt repayment, according to the Society for Human Resource Management, and while it's unclear how many companies have used the pandemic-era incentive, some CEOs stress the importance of participating.

"Corporations are the beneficiary of the education that students got," Dan Rosensweig, CEO of online education company Chegg, told Axios. "So we should be willing to help them reduce [student debt] - or pay it off completely."

Chegg started a student debt repayment program in 2019, and since then, about $700,000 has been paid off for its employees, Axios reported.

Big companies like Staples, Aetna, and Estee Lauder are also offering this benefit, and in May, Insider spoke to Greg Poulin, the CEO of Goodly - a company that helps employers offer student debt repayment as an employee benefit - who worked with Congress to make the benefit tax-free.

"The case for employer-sponsored student loan repayment programs is simple," Poulin said. "Six out of ten jobs now require postsecondary education beyond high school; yet, due to the soaring cost of higher education, a college degree remains tantalizingly out of reach for millions of Americans without the help of student loans."

Lawmakers are also working to help employees repay their student loans. Sen. Ron Wyden of Oregon introduced a bill in May to allow employers to make matching contributions to a 401(k) retirement plan while employees make student loan repayments.

"As the cost of higher education continues to skyrocket, so does the debt," Wyden said in a statement. "Americans need to be able to save for retirement, even while repaying their loans."

He added that while he supports student debt forgiveness, it's important to put "every option on the table" to relieve the burden. President Joe Biden has so far canceled $9.5 billion in student debt, but that forgiveness has been targeted to only certain groups of borrowers. It's only 0.6% of the total $1.7 trillion problems, and there's no update on widescale debt cancelation.

Meanwhile, companies are taking other steps to make education more affordable for their employees. Target and Walmart, for example, became the latest to cover tuition costs for their workers.

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