Voice of Business Blog

Guest post from Greater Rochester Chamber member Paidly

Let’s be real: everything is getting more expensive. From eggs to rent, your employees are likely feeling the squeeze. Raises seem like a good way to keep up with the cost of living, but the standard 3-5% annual raise is often a drop in the bucket once the tax man takes his cut.

If you’re looking for a way to offer support that actually feels impactful for your team, it’s time to stop looking at gross pay and start looking at Student Loan Repayment.

How $5,250 Can Operate Like $7,500

Here’s the dirty little secret about traditional raises: if you give an employee a $5,250 raise, they don’t actually get $5,250.

After federal income tax, Social Security, and Medicare, that raise shrinks. By the time it hits your employee’s bank account, that extra dough is usually closer to $3,600. If they use that money to pay down their student loans, they’ve lost nearly $1,600 in buying power to taxes.

Luckily, there’s a better way.

Under IRS Section 127, you can give that same $5,250 directly toward employee student loans tax-free.

• The Employee gets the full $5,250 applied to their debt. No taxes taken out.

• The Employer gets a full tax deduction and avoids paying the employer-side payroll taxes.

Student loan assistance is a way to give your team a massive financial win without the tax friction. And it saves you, too: to give an employee that same debt-crushing power through a standard paycheck, you’d have to give a raise of roughly $7,500.

Maximize Your Bonuses with Paidly

I know what you’re thinking: "This sounds like an administrative nightmare."

That’s where Paidly comes in. We’re the easy-button for student loan benefits. Instead of your HR team manually tracking loan servicers or cutting individual checks, Paidly handles the entire ecosystem:

• Zero-Touch Enrollment: Employees securely link their own loans.

• Direct Payments: Paidly sends the money straight to the lender (so you know it’s actually going toward student debt).

• Compliance on Autopilot: We track the $5,250 IRS limit so you don't have to worry about the paperwork.

It’s a simple way to provide a high-impact benefit with almost zero lift from your internal team.

The Bottom Line

In a world of climbing costs, the most valuable thing you can give an employee is a shortcut to financial freedom. By shifting even a small portion of your raise budget into a student loan repayment benefit, you’re providing support that’s 30% more efficient than cash.

It’s a smarter way to spend your budget, and a much faster way to change your employees' lives. Talk to an Expert or start your benefit at meetpaidly.com/employer.