When the Employer Is the Financial Aid Office (opinion)

Last year marked a turning point for higher education. The One Big Beautiful Bill Act (OBBBA) ushered in a new chapter in higher education, introducing sweeping changes to the federal student aid program and a renewed scrutiny on program outcomes. Among these changes, the law eliminated the Grad PLUS loan program and imposed new federal loan limits for graduate and professional students. Further, the Department of Education reasserted its focus on student loan repayment, sending many borrowers into panic.

Among the most consequential shifts permeating these myriad changes is an increased and forceful emphasis on workforce alignment. New initiatives like Workforce Pell and the partnership between the Departments of Education and Labor underscore a clear message: Postsecondary education must connect more directly to labor market demand.

Workforce Alignment Isn’t New, but the Stakes Are Higher Now

Aligning higher education with workforce needs is not a new goal. What is new is the profile of the modern student and the financial risk they shoulder, making alignment more urgent than ever.

Almost 40 percent of undergraduates are aged 22 or older, and a significant portion enroll part-time. Almost 70 percent are juggling jobs while pursuing degrees. The culmination of these circumstances has a clear impact on outcomes, resulting in roughly 37 million students now having some college experience but no degree.

If we are serious about workforce alignment, we must design policies that reflect how students actually live and begin their careers. One underutilized tool sits in plain sight: employer-sponsored education assistance, inclusive of direct tuition support and student loan repayment. Many high-profile companies, ranging from Amazon to Walmart to Disney, offer some form of education assistance; some partner with specific colleges to offer discounted tuition to eligible employees. And while many of these companies can be selective in their hiring, these programs can be templates for employers of all sizes.

Unfortunately, these programs remain largely invisible to students making early decisions about majors, credentials and career pathways. Today, nearly half of employers offer some form of education assistance. But a survey of Fortune 500 company employees found that while 80 percent are interested in enrolling in education while working, only 40 percent of employees are aware of their company’s benefits, and just 2 percent of employees actually use them. For graduate students specifically, very few utilize employer aid. The problem is not a lack of investment; it is a lack of signal.

We cannot fix the misallocation of talent across our workforce if students are unaware of the most in-demand fields before they pursue their degrees. That is why in health care, where talent shortages are most acute, employers like Boston Children’s Hospital, Memorial Sloan Kettering, Northwestern Medicine and VCA Animal Hospitals offer substantial loan repayment benefits, frequently totaling $35,000 to $90,000, to incentivize students to pursue the highest-need clinical fields. By offering loan repayment, rather than up-front tuition incentives, employers achieve two goals. First, they can offer benefits to future employees (not just current ones), helping to incentivize the next generation of talent. Second, they can offer more generous educational assistance by only paying loans as talent is retained over time.

The federal government is also doing its part to improve the labor-market signals sent to students. Workforce Pell ushers in a new chapter, enabling students to use their Pell Grants for the first time on programs that are less than 15 weeks in length and have strong completion, placement and earnings outcomes. New accountability rules under OBBBA will prevent students from borrowing if their program results in earnings lower than those of students with just a high school diploma. And, the Department of Education recently updated the Free Application for Federal Student Aid to add an earnings indicator, letting students know if their institution’s average earnings are below those of the average high school graduate.

Empowering Students and Strengthening Workforce Partnerships

To capitalize on this moment and maximize the efficacy and scalability of these employer programs, there are a few key changes needed.

First, under Section 127 of the Internal Revenue Code, companies can only provide assistance up to $5,250 per year. Any amount over that is considered taxable income for the employee. But this amount has not changed since the 1980s, while tuition has increased by more than 500 percent. Fortunately, under OBBBA, the $5,250 cap will finally be indexed for inflation starting in 2027, but Congress can do more by either removing this cap or increasing it to $20,000.

Additionally, the public and private sector both should make investments to centralize information about employer benefits for learners.

When partnering with employers, universities should actively collect and publicize information on available employer education benefits. Career counselors should be trained to discuss loan repayment and tuition support alongside job placement. This would allow every college to hand students a list of local companies offering tuition assistance or loan repayment programs. Access to that information could mean the difference between graduating and walking away.

At the federal level, the new Education–Labor partnership could coordinate data sharing between universities and employers offering educational assistance. States could also incentivize these relationships by offering tax breaks to companies that offer large educational assistance packages for in-demand roles.

The payoff is significant for all stakeholders: Students gain a pathway to a degree with less debt. Employers strengthen retention and loyalty by investing in their workforce. By reducing financial stress and ensuring workforce alignment, universities can expect to improve program ROI and student outcomes. And the federal government and taxpayers reduce their subsidies for higher education.

More crucially, these programs will help reallocate talent to our highest-need sectors. Employer investments in these programs function as market signals. When employers commit meaningful capital to repay loans for specific roles (e.g., in nursing, allied health or advanced clinical practice), they communicate where talent is most needed. That signal helps students make informed choices and helps institutions prioritize programs with real labor market demand.

The next evolution of financial aid will bring employers upstream, into the moment when students decide whether a postsecondary pathway is viable at all. For millions of working learners, the most important financial aid office may no longer be on campus. It may be that of their future employer.