The HR Guide to Using Your Entire Education Budget

There’s one thing I love telling HR and finance leaders: you already have room in your budget for the benefit your employees want most. The key is maximizing your unused education dollars.

For decades, "education benefit" has almost exclusively meant tuition assistance. Employees sign up, take a class, and get reimbursed. It works for some, but if you've ever looked at the actual usage numbers, you know most employees never touch it. Why? Well, their lives are full, tuition money comes out of pocket first, and going back to school while working full-time is a big undertaking.

That's why the better version of this benefit is student loan repayment.

Why employees want student loan assistance

Think about who's in your workforce right now — a huge share of them probably already went to school. They did the thing tuition assistance is designed to help with. Now they're paying it off, and those monthly student loan payments come out of a paycheck that also covers rent, groceries, and every other living expense.

Your employees don't need help getting into the classroom. What they need is a little breathing room to pay off the classes they've already taken.

That's exactly why student loan repayment lands so well as a benefit with today’s workforce. It doesn't ask anything of employees: there’s no enrollment, no upfront cost, and no proof of grades to worry about. Companies simply contribute toward the loan balances employees already have. It's instantly felt, and it makes an immediate difference in their day-to-day lives.

I’ve also found student loan repayment to be a benefit people understand the second they hear about it. Nobody needs a slide deck to explain how helpful "we'll pay down your student loans" will be.

It's the same tax-free dollars you’ve already budgeted for

If you’re thinking you can’t afford to add another benefit: think again. Thanks to the One Big Beautiful Bill Act (OBBBA), the Section 127 provision that makes education benefits tax-free is now permanent. Employers can contribute up to $5,250 per employee annually toward tuition assistance or student loan repayment completely tax-free for both sides.

It’s the same law with the same tax advantage. Adding a student loan repayment benefit simply means widening what the money you already budgeted for is able to do.

What makes student loan assistance so special?

• No legislative expiration. Permanent tax-advantages means you can build a real, multi-year program instead of a temporary pilot.

• You likely already have the budget. Most companies have an education assistance line that's currently underused. This gives that money somewhere better to go.

• It's a benefit employees will actually notice. Instead of a perk that lives quietly in the handbook, student loan repayment benefits make real and lasting impacts on employees.

Reallocating funds is much simpler than it sounds

The best part of adding student loan assistance to your offerings is that you don’t need to build a new program from scratch. You’ll be redirecting a program you already have, and it's genuinely simple to do.

Section 127 has always allowed employers to offer tax-free funds for education — employers just typically pointed 100% of it at tuition. Nothing in the law says it has to work that way. You can offer the same $5,250 and let it flow toward tuition, student loan payments, or both, under one umbrella:

• Keep the budget line exactly where it is. There's no new approval process with the finance department. It's the same dollar figure reallocated across a broader menu of eligible expenses.

• Split it however makes sense for your workforce. Some employers keep tuition assistance available for the employees who want it and simply add loan repayment as a second option. Others shift the bulk of the budget toward loan repayment once they see how many people want to take advantage of it.

• Let employees self-select. Because both paths sit under the same tax-free cap, employees who want to pursue a certificate or degree still can, while employees who are done with school but carrying the debt from it finally get something too. Nobody has to choose between the two groups; the plan is designed to cater to both.

• Administer it the same way you always have. Payments toward student loans typically route directly to the servicer, the same way tuition reimbursement routes straight to the school or the employee. It's just a different destination for the same tax-advantaged dollar.

Employers who add student loan repayment benefits usually aren't adding costs. And because it’s generally simple to reallocate funds, offering student loan assistance usually happens in a matter of weeks — no need to wait on a new open enrollment cycle to clear finance.

Expanding your benefits makes a difference

At Paidly, we help employers set up student loan repayment benefits using their existing Section 127 dollars so employees can choose the path that fits them; whether that’s tuition reimbursement, student loan repayment, or even 529 contributions for their loved ones. When we talk to employees who started receiving student loan assistance, the reaction is consistently the same: relief, gratitude, and genuine surprise that a benefit this useful was on offer.

Tuition assistance is great, but student loan repayment gives that same generosity a way to reach everyone, not just the small slice of employees with the time and bandwidth to go back to school.

If you're sitting on an education budget and wondering how to make it meaningful for your people, know that you don't need a bigger budget or a bold pitch. You just need to work the dollars you already have a little differently.

Ready to get started or want to learn more? Talk to an Expert to see how you can use your education budget more effectively.