Sens. Warner and Kaine host a student debt roundtable Jan. 27, 2016

More young workers are getting help paying off their student loans from an unlikely source: their employers.

By making student-loan payments part of a benefits package, a handful of companies are betting the perk will be a good recruiting and retention tool, considering the bulk of bachelor’s degree recipients graduate with student debt these days. Employers offering the benefit so far include accounting and professional-services firm PricewaterhouseCoopers, investment bankers Natixis and ChowNow, an online food ordering platform. PwC currently offers the benefit in a pilot program but plans to offer it to all employees starting July 1.

But job applicants beware: Unlike matching gifts that employers will put into a retirement account such as a 401(k), money to help repay student loans is taxable income. There are efforts in Congress to make the perk tax-free. But for now, potential recipients need to do some calculations to determine how much of a benefit they actually would receive after taxes.

There are other considerations as well. As Mark Kantrowitz, publisher of Cappex.com, a college- and scholarship-search site, points out, help with student loans is not the same as simply getting paid more. Some employers cap the amount of debt relief they will provide, which means the extra money will eventually run out. Even when a company is willing to pay off the entire debt, Mr. Kantrowitz says, higher pay might still be a better deal.

“It’s not like having a higher salary because as soon as you run out of debt, you no longer get this benefit,” he says.

Still, Mr. Kantrowitz says he can see young job seekers being swayed by such an offer because it shows a company is focused on their needs.

Well received

Indeed, in a September survey from Iontuition, a website that helps manage student-loan payments, more than half of current students and recent college graduates with student loans said they would rather receive an offer of loan help than a health plan. Nearly half of those surveyed also said they would rather have student-loan help than a 401(k).

Companies that offer student-loan help typically do so on top of a 401(k) and health insurance. But if workers find themselves in a situation where that’s not the case, they may be better off with the more traditional, tax-free perks. Stashing money in a 401(k) offers “decades of potential future growth,” Mr. Kantrowitz says, unlike paying off a loan. Of course, he says, if workers don’t have extra money to save for retirement because they’re still making loan payments, that’s another factor to consider.

Generally, the faster an employer offers to pay off the debt, the better the benefit, Mr. Kantrowitz says, because it keeps interest from accruing on the loan, which ultimately makes it cost more.

For now, not many employees or job applicants have to think about such things. Only 3% of companies in 2015 offered to help their employees pay off their student loans, according to a survey from the Society for Human Resource Management.

But the society sees signs that this benefit could become more common. For starters, millennials now account for the largest demographic in the workforce and are likely to begin demanding the benefit, says Bruce Elliott, the society’s manager of compensation and benefits. With the job market recovering, millennials will have more clout when evaluating job offers, he adds.

Startups arriving

Mr. Elliott also notes the burgeoning industry of startups offering to help employers manage student-loan repayments. “That kind of tells me that this could very well be the beginning of a trend,” he says.

As of late March, one of those startups, Boston-based Gradifi Inc., had 101 companies waiting to launch their own student-loan repayment programs through the Gradifi platform, says Chief Executive Tim DeMello. Gradifi, which worked with PwC on its student-loan perk, sends money deposited by an employer directly to an employee’s student loan servicer. Starting July 1, PwC will put $100 a month toward its employees’ loans, up to a total of $7,200, says Michael Fenlon, global talent leader for PwC.

Similarly, CommonBond, a lender that specializes in student-loan refinancing, is offering its employees $1,200 a year toward student loans until the worker pays off her debt.

When the benefit was announced, one of the first questions was, “How is this going to be taxed?’ ” says CommonBond CEO and co-founder David Klein.

Mr. DeMello says some of the companies he works with are giving employees slightly more than the agreed repayment amount to cover the tax bill, although neither PwC nor CommonBond steps up its payments to cover taxes, according to company spokespeople.

Student Loan Genius, another company that helps employers manage their student loan benefits, unveiled a new option earlier this month that may help to alleviate workers’ tax concerns. With this feature, companies can make a contribution to an employee’s retirement account pretax that’s triggered by a worker’s student-loan payment.

Sen. Mark Warner (D., Va.) introduced a bill in Congress in January that would allow employers to put as much as $5,500 a year pretax toward their workers’ student loans. Unlike other legislative proposals for the student-debt crisis—including allowing borrowers to refinance their loans at lower interest rates through the federal government and making two years of community college free—the bill has support from some Republicans. Sens. John Thune (R., S.D.), Shelley Moore Capito (R., W.Va.) and Kelly Ayotte (R., N.H.) co-sponsored the measure.

“It’s not going to solve every problem,” Sen. Warner says of the bill. “But it’s part of a solution that is bipartisan, that’s workable, that we can actually do something on this year, even in an election year.”