Student loan match (qualified student loan payment match)

What a student loan match is

It is an optional plan feature. An employee who is repaying a qualified education loan certifies the payments to the plan each year, and the plan matches them under the same formula it uses for deferrals. Loan payments and deferrals together cannot exceed the deferral limit, $24,500 in 2026. The match must be offered to everyone who is eligible for the regular match, at the same rate and on the same vesting schedule.

Why it matters to employers

The feature helps employees who cannot afford to save while repaying loans, and it can help with hiring. It adds match cost for people who were not deferring, and someone has to collect certifications by the plan’s deadline. Payroll does not handle the loan payment itself. IRS interim guidance lets a plan rely on the employee’s certification, and lets the plan run the ADP test separately for employees who receive this match.

Example

A plan matches 100% of the first 4% of pay. An employee earning $60,000 defers nothing but pays $300 a month, or $3,600 a year, toward her student loans. She certifies the payments and receives a match of $2,400, which is 4% of her pay.

Common mistakes

• Using a different match rate or vesting schedule for student loan payments.

• Offering the feature to only some of the employees who are eligible for the match.

• Having no certification process or annual deadline.