These banks help employees with their student loans. More could follow.

July 11, 2023 6:31 PM

The Supreme Court's decision to strike down President Biden's student loan forgiveness plan is set to put extra pressure on borrowers who must resume payments this fall.

The ruling could provide a leg up in recruiting to companies that offer their employees help with repaying student loans.

Assistance with student loan repayment isn't the norm in the banking industry. But some large financial institutions do offer to cover part of borrowers' monthly payments — or provide one-time payments to reduce principal balances — their spokespeople told American Banker.

More common across the industry are benefits that help employees attain a degree or take new classes. A number of banks offer to fully or partially cover tuition costs for current employees and provide scholarships for classroom necessities like textbooks.

But following the Supreme Court's ruling, companies that help to pay for degrees that are already under employees' belts may become more appealing for job hunters still saddled with debt.

And a little-known provision in the CARES Act of 2020 makes the prospect of receiving student loan assistance from employers more attractive. Thanks to the pandemic-era law, student-loan repayment contributions won't be taxed as income through at least the end of 2025, boosting the potential benefit for employees. Before the CARES Act, the payments were taxed as part of employees' income.

Here's a look at some of the student-loan-related benefits that banks across the country have offered to their employees.

Ally Financial

Ally is among the banks that help their employees pay down student loans. Employees are eligible for $100 per month in student loan assistance, up to a maximum of $10,000. The $196 billion-asset bank also reimburses staff for up to $10,000 per year in tuition payments for college degrees.

The bank introduced new education benefits back in 2019, including student loan repayment and a $3,600 increase in the maximum tuition reimbursement amount.

"We look for what we can do to modernize our benefits," Kathie Patterson, chief human resources officer at Ally, told Employee Benefit News at the time. "We know it helps us to attract, retain and engage our workforce."

Citizens Financial Group

Citizens also makes the list of banks that offer student loan repayment assistance. The Providence, Rhode Island-based bank works with a student-loan servicing firm to provide employees with a one-time principal reduction of $500. For employees working on completing their bachelor's degrees, the bank covers up to $5,250 in tuition costs. The limit increases to $7,000 for master's students.

Citizens' effort to help employees reduce their student-loan debt makes sense in light of the bank's growing student loan refinancing business. The bank refinances private and federal student loans, allowing both students and their co-signers to benefit when lower interest rates are available. Citizens reported $13.7 billion worth of education loans on its balance sheet last year, up from $12.9 billion in 2021.

Truist Financial

Truist allows full-time employees to exchange paid vacation days for student loan repayments, up to a maximum of seven days per year. The funds can be used to pay down any education loans taken out in the employee's name, whether they were for the employee or a family member.

"Student debt can put a significant strain on financial well-being," Truist said in a statement. "Monthly student loan payments can leave teammates unable to contribute to other benefits, like their 401(k)."

Truist also reimburses employees working toward a bachelor's or master's degree for up to $5,250 in tuition expenses each year.

SoFi Technologies

SoFi, which is one of the nation's leading student loan refinancing companies, offers its more than 4,000 employees $200 a month in reimbursements for student loan payments.

There is no cap on the benefits. The San Francisco lender also partners with other companies to help their own employees refinance student debt.

"Student debt has reached crisis proportions in this country, and borrowers — especially Millennials — are struggling to repay their loans and put aside even the smallest amount for their future," SoFi said in a statement. "So it makes sense that we're seeing a lot of excitement about the benefit."

First Republic Bank

Before its failure this spring, First Republic offered some of the most generous student-loan benefits in the banking industry.

Employees with student loans received $100 monthly repayment stipends for one year, $150 monthly stipends for a second year and $200 monthly stipends for every following year until their loans were repaid. First Republic staff members could also use the benefit to help pay off student loans taken out on behalf of their children or other dependents.

Many of the First Republic employees who had been taking advantage of these benefits were offered jobs at JPMorgan Chase when America's biggest bank acquired a large part of First Republic. JPMorgan offers tuition assistance benefits to its employees, but not help with repaying student loans.