Paul Sisolak, Author at Financial Avenue

Picture graduating from college and landing a job that offers a good salary, health benefits, retirement package — and your employer will help pay off your student loans.

More and more companies are jumping on the bandwagon, sponsoring benefit programs to repay their employees’ student loans. The benefits are clear on both ends: Employers get the leverage they need to attract and retain millennial talent, and new hires find professional advancement and help on their student debt.

But there is one drawback — job-sponsored student loan reimbursement is not tax-free. Like your paycheck, it’s counted as income and subject to income tax.

Does this mean that accepting student loan help isn’t worth it? Not necessarily. Offsetting the tax burden may be possible with smart student loan decisions, and some proposed Congressional legislation may eventually make employer-sponsored student loan payments tax-free.

How job-sponsored student loan payments work

Companies generally allocate a certain amount of money from their budgets for employees with student loans. We’ve previously mentioned some high-profile organizations who offer student loan payoff benefits. Here are other examples of companies that pay off student loans.

Fidelity Investments offers a $2,000 reimbursement package distributed over five years to employees who pass the 6-month mark at the firm.
Education-based Chegg disburses up to $1,000 in student loan repayment annually to all its employees.
PricewaterhouseCoopers’ student loan plan gives employees the chance to receive up to $10,000 over six years to pay off their debt, up from $7,200.
Global asset management company Natixis offers workers employed for more than five years $5,000 applied to their student loan debt, with an extra $1,000 annually for the following five years.
Aetna will start providing a $2,000 annual match for employee student loan payments, maxing out the benefit at $10,000.
LendEDU also offers employees $200 per month — $2,400 per year — towards their student loans.

Beware of the tax implications

Don’t confuse student loan reimbursement with tuition reimbursement. Under IRS rules, if your employer pays you up to $5,250 annually in educational assistance benefits (including tuition), it’s tax-deductible.

Student loan reimbursement is a different story. You’ll need to claim any amount on your tax return if your employer compensates you for your loans, no matter what the company policy or payout is. Considering that it qualifies as taxable, it would technically be closer to a salary bonus than a benefit.

All that may change if the Student Loan Repayment Assistance Act of 2015 passes muster through Congress.

The proposal would amend existing tax code to allow recipients of employer-sponsored student loan repayments to deduct up to $6,000 per taxable year, or $50,000 over a lifetime. To qualify, according to the pending bill, participants are required to pay at least $50 towards their student loans each month.

A second piece of legislation in the works, the Employer Participation in Student Loan Assistance Act, would liken job-endorsed student loan payment plans to educational assistance benefits, permitting employers to compensate employees up to the same $5,250 in student loan debt, tax-free.

Benefiting from employer-sponsored benefits

Don’t let tax fears discourage you from participating in an employer-backed student loan assistance program. If you’re concerned that you’ll end up paying more to the IRS compared to what you’d likely save in student loan payments each month, consider the following:

Tax rates and potential savings depend on your finances

Minimizing the tax hit will depend on several factors, like the interest rate and terms of your student loans, your salary, and the structure of your employer’s student loan assistance program.

According to The Wall Street Journal, if an employee carries the national average of $35,000 in student loan debt with a 10-year standard repayment plan and 5% APR, the worker could pay off their loans in just 7.5 years with a $100 monthly contribution from their employer.

If that same employee earns between $40,000 and $70,000 annually, they’ll owe $2,250 in taxes but earn $6,750 towards their loan repayments.

Crunch some numbers to see if you’ll come out ahead of the tax liabilities by receiving student loan benefits from your employer.

Some programs are already tax-free

Some public sector student loan repayment programs are tax-exempt, including the National Health Service Corps Loan Repayment Program, student loan repayment programs under the Public Service Health Act, and other similar loan repayment or forgiveness programs dedicated to providing health services in underserved areas.

Refinancing can save you even more

A student loan refinance can provide borrowers with a lower interest rate and more amenable repayment terms. Combine it with repayment assistance from your employer, and you could come out on top financially.

According to NerdWallet, an MBA holder with about $52,800 in student loan debt could potentially save up to $5,039 in interest payments if their employer paid them $167 monthly for five years — but they could potentially save an extra $2,142 by refinancing.

Research potential employers’ student loan repayment policies

Future employers who reimburse student loans may be ahead of the curve on the tax-savings front.

Some companies have begun partnering with startups like Student Loan Genius, whose student loan 401k contribution feature links retirement savings to student loans. With the feature, companies can contribute pretax dollars to an employee’s retirement account each time the employee completes a student loan payment.

Consider your retirement

There’s a less-obvious benefit of working with an employer who’ll contribute towards your student loans: The faster you pay off your student loans, the sooner you can really tackle your retirement contributions.

For now, prioritize your student loan payments and weigh the pros and cons between the benefits you’re likely to receive against the taxes you’ll need to pay.

By keeping abreast of emerging companies participating in student loan payment programs as well as pending legislation, paying off your balance and reducing debt are just a few ways to get your job to go to work for your loans.

The article The Dark Side of Job-Sponsored Student Loan Payments originally appeared on Student Loan Hero

About 70 percent of all recent college graduates have student loan debt, while nearly 30 percent of Americans admit they have zero emergency savings of any kind. If you find yourself in both camps, trying to figure out how to save money and pay off debt at the same time can feel like a vicious circle.

Yet, ideally, you should have at least $1,000 set aside for a financial emergency; some experts recommend up to eight months’ worth of expenses. That’s a tough number to reach with student loans debt looming over your head.

So what if you’ve scrimped, saved, and budgeted – but still aren’t seeing results? It might be time to get creative.

How to build an emergency fund with these offbeat ideas

They may seem unorthodox, but try some of these tips to start saving up your emergency fund without missing a single student loan payment:

1. Have a “Bill Haggle Day”

We all have to pay the bills – but did you know you don’t necessarily have to pay as much as you are right now?

Don’t be afraid to contact your insurance providers, reach out to other creditors, and call your cable company to ask for lower rates or better deals. The worst they can say is “no,” but you’ll never know their answer for sure if you don’t ask.

Use a good driving record to score a $20/month reduction on your auto insurance. Or look up competing cable providers’ fees and take that to your current carrier. The same goes for your credit cards; if they don’t match the rate, tell them you’re jumping ship.

Add up these savings for some much-needed dollars to your emergency fund.

2. Pawn off your stuff

In the age of Craigslist and eBay, it’s easy to forget about good ole pawn shops. But they’re still a simple way to get cash fast by selling your old stuff.

Raid your closet, drawers, basement, or garage and get rid of what you don’t need. It could be clothes, or old furniture, computer equipment, or anything hanging around.

While you might not be able to get a spot on Pawn Stars, check with a few local pawn shops to see if you can get a fair price on your goods. Don’t relinquish anything of sentimental value you might regret.

Another suggestion is to browse flea markets and thrift stores for vintage objects of value, buy them, and resell them at a higher price. Remember to bring your phone along with you to spot price differences before you buy and resell. It’s another way to earn some extra dough for your emergency fund.

(Scavenging for scrap metal at your local junkyard or dumpster diving for treasure are at your own risk.)

3. Quit your bad habits

Too many cigarettes, eating out with friends, Starbucks lattes, or more junk food than what’s healthy – the first reason you should be giving up those vices of yours is for the sake of your well-being. Then again, it could also save you a bunch of bucks for that emergency fund (or your student loan payments, whichever you prefer).

According to Daily Finance, one pack of cigarettes a day can cost you $511 a year. Eating at McDonald’s twice a week can run you up $860 annually. A weekly beer run may rack you up $234 per year. And let’s not forget that daily $1 lottery ticket purchase is $365 by Dec. 31.

Start cutting back or give up some of these habits, if you can. Your savings will benefit and so will your health.

4. Become a human guinea pig

Schools, hospitals, and clinics are always looking for volunteers to participate in clinical tests, drug trials, and other research projects. Some will pay you as an incentive to participate.

The National Institute of Health, for one, offers more than 300 studies for healthy volunteers. You might check online to see if there are any similar opportunities.

If getting poked or prodded isn’t your thing, you might check into participating in a psychological, focus, or survey group – in-person or online – where you can get paid to log your opinion on everything from product testing to polling. Just make sure to read the rules and fine print before you sign up and be certain that the organization is legitimate.

5. Rent out your car

You don’t need to become an Uber driver to raise some extra cash. Also consider renting your car out for money.

Sites like Turo.com and JustShareIt.com are like the Airbnb of cars. List your car, respond to renters’ requests, and lend your car for the amount of time you set. If you don’t need your car for extended periods of time, renting it out this way can contribute to your emergency fund earnings. According to Turo.com, a $14,000 car rented out for 10 days a month can net you $3,466 per year. There’s also a $100 signing bonus.

6. Sell your body parts

Those student loans may cost you an arm and a leg, but don’t worry, you won’t need to go as far as putting your limbs on the market for cash. However, you can receive money in exchange for blood, plasma, hair, sperm, breast milk, eggs, and yes … even poop.

You can earn about $20 to $50 per blood or plasma donation; you’re legally allowed to donate up to twice a week. In some cases, you might be paid a bit more on your second return visit of the week, so you could stand to earn some regular side cash if you’re not squeamish. For hair, many websites solicit long, healthy hair in exchange for cash.

And yes, believe it or not, a company called OpenBiome will pay you $40 per feces sample, $50 if you donate five days a week. The screening process can cost up to $5,000, however, and you have to be super healthy to participate.

Some of the best ways to keep on top of student loan debt without dipping into your vital emergency funds is to keep a tight budget, track your spending, and keep your savings in a high-interest deposit account.

Combine these with some of the above more creative tips and your student loan payments won’t become the emergency that your emergency savings need to rescue.

“This article, 6 Creative Ways to Build an Emergency Fund , was originally published on studentloanhero.com.”