Employer paid Student Loan; benefits?

I trust all is well. I am looking into paying an employees student loan balance (long term employee who deserves it). Not a supplement but the full balance, roughly $20,000. I am curious as to how the employee would file this on taxes; is there a situation where he comes out without paying for anything? I believe he would have to file this as taxable income but is there deduction/scenario that would reduce or eliminate the amount taxed? Not sure why an individual and/or business would be penalized for doing this? "oh, glad you got your student loan paid for, now you owe the IRS more." Is there are way to simply pay the loan off (out of a business account) and deduct it from the business income tax?

Are there benefits as an employer to doing so, aside from keeping talented staff?

 

I believe it is taxable unlike tuition reimbursement as IRS has not yet caught up with this being a growing benefit that many employers are providing to employees. You can gross up the payment to the employee so that he is not harmed for any tax due - this is what we do at my company.

Here is what I found on this:

It’s important to keep in mind that while having your employer help you pay down your student loans can be a valuable perk, this benefit is not tax-free. According to the IRS, if you receive educational assistance benefits from your employer — reimbursement of tuition expenses, for example — you can exclude up to $5,250 of those benefits each year, meaning that you don't have to claim them as income on your tax return. However, student loan reimbursements are considered taxable income — unless you receive student loan repayment assistance through any of the following:

• The National Health Service Corps (NHSC) Loan Repayment Program
• A state education loan repayment program eligible for funds under the Public Health Service Act
• Any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in underserved or health professional shortage areas (as determined by such state)