The CARES Act expanded the definition of expenses to include employer payments of the employee’s student loan debt for payments made between March 27, 2020 through December 31, 2020. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 extended the exclusion for employer loan repayments made through 2025. (Code Sec. 127(c)(1)(B), amended by Act Sec. 120)

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.