An excellent benefits package can help hospitals and healthcare employers attract and retain the highly skilled and dedicated staff they need. This means offering benefits that not only meet employees’ needs but also help them overcome barriers and thrive.
While benefits like excellent healthcare and generous time off are vital, a student loan repayment benefit can be especially valuable to healthcare employees. Due to high education costs, student loan debt is a major problem among medical professionals. 84% of medical students and 90% of other health sciences students graduate with student loan debt. The average physician in the U.S. has $200,000 in debt. The median student loan debt for nurses without advanced degrees is around $50,000.
Let’s explore what a student loan repayment benefit looks like, what healthcare employers should consider when implementing it, and how repayment assistance differs from forgiveness.
What is student loan repayment assistance?
Student loan repayment assistance refers to several benefits an employer may offer to ease employees’ student loan burdens.
Employers can make direct contributions toward repaying student loan debt. They might also offer employees flexible funds that can be directed toward several benefits, including student loan repayment.
Understanding recent changes
Before 2020, student loan repayment benefits were taxable to employees and included in payroll taxes.
However, in March 2020, the CARES Act began allowing employers to provide up to $5,250 in student loan repayment assistance (and tuition assistance) each year without tax obligations for the employer or employee.
The Consolidated Appropriations Act then extended the tax break through 2025. However, hospitals and their employees should keep in mind that tax requirements may change.
Student loan repayment employee benefit options
Hospitals and other healthcare employers can choose to provide a benefit for student loan repayment assistance in a few different ways, including direct repayment and discretionary repayment.
Considerations for providing student loan repayment assistance
Some variables to consider when offering student loan repayment assistance:
Student loan repayment benefits vs. student loan forgiveness programs
While student loan repayment benefits and student loan forgiveness programs can both alleviate financial stress, they work differently.
Student loan repayment assistance benefits go directly toward making debt payments, which can lower the monthly expense of student loans.
On the other hand, student loan forgiveness programs eliminate all or part of the debt that needs to be repaid after a set period of qualifying repayments. The debt is forgiven in a lump sum. Forgiveness programs have different criteria than student loan repayment benefits, and different tax implications.
Other ways to help healthcare employees manage student loan debt
Student loan repayment assistance isn’t the only way employers can help employees manage student loan debt. Some other options include providing access to budgeting tools, healthcare-specific banking programs, workshops on accessing federal loan forgiveness programs, and tuition assistance for employees furthering their education.
Healthcare employers could also collaborate with educational assistance benefits platforms to offer student loan counseling and additional information on student loan forgiveness programs.
Access to these tools can not only help healthcare employers retain the best talent, but can also ease employees’ financial strain, reduce their stress, and help them focus more on performing at their best.
Learn more about student loan forgiveness for healthcare workers
Student loan debt can be challenging to manage at times, but there are resources that can make the repayment process easier. Healthcare employees who need help managing their student loan debt can find guidance through a Laurel Road student loan consultation specifically tailored to their needs as healthcare workers.
