The CARES Act expanded the definition of expenses available to qualify for the $5,250 excludable employer-provided educational assistance to include employer payments of the employee’s student loan debt. This special allowance is available for payments made between March 27, 2020 through 2025 (as extended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020).

The employee isn’t allowed to claim the above-the-line student loan interest deduction for interest that the employer paid. So, in some cases it may be advantageous for the employer to designate their payment as going to principal only so the employee can claim the interest deduction.