SHRM Backs California Bill to Spur Employer Student Loan Benefits

SHRM is throwing its support behind a California bill that would incentivize employers in the state to provide student loan repayment assistance.

California Assembly Bill 386, which was introduced Feb. 3 by Republican Assemblymember David Tangipa, proposes a tax incentive for businesses that contribute to their employees’ student loan payments, offering a voluntary dollar-for-dollar tax credit of up to $3,000 per full-time employee annually. It would apply to taxable years beginning on or after Jan. 1, 2026, and before Jan. 1, 2031.

The program would be capped at $25 million and would focus on prioritizing small- to medium-sized businesses, as well as businesses that are owned by veterans, women, minorities, or people with disabilities. 

On March 17, SHRM member Patricia Leyva, senior human resources manager at the Native American Health Center in Oakland, Calif., testified before the California Assembly Committee on Revenue and Taxation in support of the bill on behalf of SHRM and SHRM California. 

“Workforce challenges require workforce solutions. As HR professionals, we know that attracting and retaining talent takes more than just competitive pay,” Leyva told the committee. “Employers need meaningful benefits that support their workforce and help them remain competitive in California’s high-cost job market.”

AB 386, Leyva said, provides “a much-needed incentive for California employers to invest in their workforce by supporting student loan repayment assistance.”

The testimony in support of AB 386 comes as more employers seek ways to manage employees’ financial stress — including massive amounts of student loan debt — while also looking to improve retention and attraction. Student debt saddles employees to the tune of a collective $1.77 trillion, according to the Federal Reserve. Meanwhile, Californians carry more student loan debt than the national average, with an average debt of over $38,100 per borrower, Leyva said.

Student loan repayment benefits have been growing in popularity over the past several years, with the SHRM Employee Benefits Survey finding that about 9% of organizations offered the benefit in 2024, up from 7% in 2022. 

“Employers that provide student loan repayment benefits make a powerful contribution to lowering this burdensome debt,” Leyva said in her testimony.

Other industry experts say the benefits are a way to offer support to employees while also serving as a competitive advantage for organizations. A recent survey from the International Foundation of Employee Benefit Plans (IFEBP), a nonprofit organization with 31,000 employer members, found that the top reasons employers consider student loan repayment programs are to attract future talent (cited by 92% of employer respondents), retain current employees (80%), maintain or increase employee satisfaction and loyalty (58%), and remain competitive within the industry/region (55%).

Offering the benefit also meets the growing demands of employees: Half of employees (51%) said their employers should assist with student loan debt, according to a 2024 survey of 1,000 employees conducted by New York City-based financial firm Betterment at Work.

Student loan benefits are “increasingly appealing” for these reasons, Edward Gottfried, senior director of product management at Betterment at Work, recently told SHRM.