Why employers see positive ROI on SLR
Under IRC Section 127, employers can contribute up to $5,250 per employee per year toward student loans completely tax-free for the employee. Section 127 employer student loan repayment is permanent under OBBBA 2025, with inflation indexing of the $5,250 threshold beginning in 2026. Employer contributions are also exempt from the 7.65% FICA payroll tax, creating an immediate cash savings on every dollar contributed. When combined with measurable retention gains (Section 127 program data shows a 25% average improvement in participant retention), most employers reach positive ROI within the first 12-18 months.
What this calculator measures
- Direct program cost: your annual employer contribution.
- FICA payroll-tax savings: 7.65% of every contribution dollar.
- Replacement-cost savings from improved retention: SHRM estimates 50-200% of annual salary per departure.
Methodology
Participants = total employees × % with student debt. Defaults to 30% per Federal Reserve data; healthcare and legal industries trend 50-81%.
Baseline departures = participants × turnover rate. Departures with program = baseline × (1 − 25%). Retained = baseline − projected. Replacement savings = retained × (salary × replacement %).
Per-participant annual contribution is capped at $5,250 (the Section 127 tax-free maximum). Amounts above that would be taxable and are not modeled here.