How to design your student loan assistance program, part two: How much should the company contribute toward employee student loans?

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Everyone seems to be talking about student loan assistance as an employee benefit, but how exactly would this work at your company?

In part one of this series, we discussed how employers can estimate enrollment by understanding how many of their employees likely have student loans. Once you have an enrollment estimate, you’re likely asking yourself how much you should be contributing to your employees’ loans each month – we cover this exact question in part two of our four-part series.

Part two: Defining how much the employer should contribute toward employee student loans

As an employer, you need to consider two factors when calculating your contributions toward employee student loans:

1) What is going to be materially impactful to the employee?

2) What is a realistic contribution amount given current budget?

Striking the right balance is the key to setting your contribution amount.

To find the threshold of materiality for the employee, you’ll need to consider the average loan situation for your population. Armed with this information, you can model out the financial impact of your contribution.




Consider the following framework:

  • The average American holding student debt has $31,000 in debt.
  • An employer who contributes $100 per month toward that employee’s loan will save the employee >$11,000 in principal and interest over the life of the loan and shave three years off of the repayment schedule.


This certainly meets the threshold of materiality for an employee. For many employers, it also falls within reason from a budget perspective.

In practice, we see contribution amounts ranging from $50-$500. The upper end of that range is more common in some healthcare sectors where debt load is much higher than $31,000 and meeting the threshold of materiality requires a bigger contribution.

If you’d like to get some guidance on what might make sense for your population, schedule some time with a Peanut Butter team member through the below button.


With a firm estimate on employee enrollment and a model for defining your contribution amount, you are now ready to calculate the total investment and resulting ROI associated with your student loan assistance program.  In the next article of this four-part series, we’ll create a plan design budget and model out expected ROI.

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