Tax Tip 2024-68: Employer-offered educational assistance programs can help pay for college

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Issue Number: Tax Tip 2024-68

Employer-offered educational assistance programs can help pay for college

An educational assistance program is an employer’s written plan to provide employees with undergraduate or graduate-level educational assistance. These programs allow employers to pay student loan debt and other education expenses tax-free.

Eligible expenses

Educational assistance programs can help pay for:

• Books
• Equipment
• Supplies
• Tuition and other fees
• Qualified education loans

Loan payments
These programs can be used to pay principal and interest on an employee's qualified education loans.

The option is available only for payments made after March 27, 2020. Under current law, this option will be available until Dec. 31, 2025.

Payments made directly to the lender and those made to the employee qualify under these programs. By law, tax-free benefits under an educational assistance program are limited to $5,250 per employee per year. Normally, assistance provided above that level is taxable as wages.

For other requirements, see Publication 15-B, Employer's Tax Guide to Fringe Benefits. Chapter 10 in Publication 970, Tax Benefits for Education, provides details on what qualifies as a student loan.

More information
Frequently asked questions about educational assistance programs

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