The end of the student loan repayment moratorium marks a fresh wave of financial challenges for many American workers. In a time when a significant portion of the workforce feels financial strain, employers find themselves in a unique position to offer support and alleviate both the emotional and financial stress tied to this transition.
According to a study conducted by SoFi, 84% of employees acknowledge that financial stress seriously affects mental and physical health, diminishing productivity and hindering their ability to focus. Surprisingly, financially challenged employees may spend as much as 9.2 hours on the clock, per week managing finances–that’s more than a whole week each month.1
Yet, striking the right balance of support for your workforce is a complex task. While assisting with student loan repayment could be a strategic move to attract and retain talent, particularly among younger generations burdened by student debt, it may raise concerns among debt-free employees.
In this article, we’ll explore the current landscape of student debt and strategies for employer support to cultivate a financially and emotionally stable workforce.
STUDENT LOAN ASSISTANCE: A COMPETITIVE EDGE
Employers in various sectors increasingly recognize the value of offering college loan assistance as part of their employee benefits packages. The inclusion of student loan repayment benefits is often most prevalent in industries including:
- Healthcare and Services: 31%
- Non-profit: 23%
- Government, Law, and Politics: 14%
- Financial Services: 8%
- Education: 8%
This perk can offer a natural competitive edge in industries where student debt is often significant.2 Consider for example, healthcare and medical professionals who often carry high student loan debt. Now, pair that with a huge demand for healthcare workers and practitioners, and you’ve got a real winner with student loan repayment benefits.
And it’s not just healthcare; the same can be said for grads heading into government and non-profit positions. These fields are often competing for the same talent as the private sector. So, showing off those student loan benefits can be a game-changer, whether the organization offers them directly or as part of bigger initiatives.
EMPOWERING EMPLOYEES THROUGH STUDENT LOAN SUPPORT STRATEGIES
Employers offering student loan benefits can significantly enhance employee attraction, retention, productivity, and overall job satisfaction. And the positive impact isn’t limited to just these factors. Employers can also play a pivotal role in helping their workforce tackle student debt and the financial strain it brings. To support employees trying to manage student loans, employers may consider the following strategies:
EMPLOYER STUDENT LOAN REPAYMENT PROGRAMS
According to a recent Employee Benefit Research Institute survey, 17% of large employers already provide student loan debt assistance, and an additional 31% are planning to do so.
Offering student loan repayment assistance can take various forms, including providing tax-free student loan repayment benefits under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Employers can offer tax-free benefits up to $5,250 in student loan repayment annually through 2025.
Employers may consider lump-sum or recurring payments, and they can also link student loan assistance to retirement programs.
EDUCATIONAL ASSISTANCE PROGRAMS AND FINANCIAL PLANNING SERVICES
Employers are uniquely positioned to offer valuable resources and support to help employees understand and manage their federal student loan debt and cultivate financial wellness.
Counseling can help guide employees as they navigate student loan repayments while balancing other financial responsibilities.
Sharing educational resources such as loan payoff calculators, income-driven repayment plan options, and offering financial counseling and webinars are cost-effective ways to empower employees to make informed financial decisions. This can help reduce stress and enhance workplace productivity.
Some employers contribute to employees’ retirement accounts when eligible income is allocated to loan repayments, funds that would have otherwise gone to their 401(k).
This approach frees up financial resources, allowing employees to accelerate their loan repayments and simultaneously build their retirement savings.
Although this doesn’t address existing debts, providing tuition reimbursement or assistance can prevent employees from accumulating more student debt for future education.
Such programs convey the value of employees, potentially increasing engagement, satisfaction, and retention.
LEGAL CONSIDERATIONS FOR STUDENT LOAN REPAYMENT INITIATIVES
While implementing student loan repayment initiatives is positive, being aware of potential legal challenges is essential. Employers should consult local legal counsel before deciding on or changing benefit offerings to ensure compliance with applicable laws and regulations.³
SHAPING A MORE SECURE FINANCIAL FUTURE WITH STUDENT LOAN REPAYMENT BENEFITS
Student loan repayments come at a difficult time, with inflation looming large in the minds of millions of borrowers. Fortunately, employers can support in many ways, from formal benefits offerings to third-party resources. Every workplace is different, so you must consider your unique workforce’s needs and desires.
At MJ, we can help you explore all your options. Our data-driven, holistic approach transcends traditional benefits consulting, allowing us to develop dynamic solutions that unleash the full potential of your employees and drive organizational success.
By integrating your organizational data, we can draw correlations, make strategic plans, and guide you on allocating your resources most effectively. Whether managing risk, optimizing benefits, retirement, compensation strategies, or developing a total rewards program, MJ can be the singular partner you need.
The benefit of having everything under one roof is gaining a comprehensive view of the entire landscape and understanding how one decision can ripple through various aspects of your company. This insight empowers you to make smarter, more informed decisions.
Reach out to us today to discover how MJ can assist you in navigating the student loan debt landscape and crafting a benefits plan that fosters success.
Together, we can pave the way for a brighter financial future for both your team and your organization.
- Alyssa Place. “Employees spend 25% of their workday worrying about money.” Employee Benefits News. benefitsnews.com. Retrieved Sept. 2023. https://www.benefitnews.com/news/sofi-found-that-employees-have-high-levels-of-financial-stress
- Jennifer Liu. “Entry-level jobs offering student loan repayment have doubled since 2019—where to find them.”com. Retrieved 2023. https://www.cnbc.com/2023/09/05/entry-level-jobs-with-student-loan-repayment-doubled-since-2019-says-new-data.html
- “Helping Employees Prepare for Student Loan Payments.” zywave.com. Retrieved Oct. 2023. https://cms.zywave.com/content/514277?referenceGuid=72fafc93-db8d-4913-96f3-05e0d0d8635e&fromLabel=Search%20results&internalHref=%2Fsearchresults%3Fquery%3Dstudent%2520debt%26searchType%3Dcontent%26pageIndex%3D0%26sortType%3Dmatch&defaultLanguage=en-us