On Friday, June 30, the Supreme Court blocked President Joe Biden’s student loan forgiveness plan, which attempted to relieve $20,000 for millions of borrowers. Loan repayments will resume October 1, 2023, with interest resuming September 1, 2023.
According to the Employee Benefit Research Institute, around 17% of the workforce has student loans, with the average borrower owing $20,000-$40,000. Data from the Consumer Financial Protection Bureau suggests that one in five borrowers will struggle to repay these loans.
Now, employers have an opportunity to set themselves apart from others and offer unique support to their employees. Only 17% of employers offer a student loan repayment program, and the need for such a benefit has exponentially increased after the repayment pause and the financial hardship of the COVID-19 pandemic. A study at Avangrid discovered that 50% of employees would stay with their company longer if a student loan benefit was offered.
Types of student loan repayment assistance
Each organization has its own needs, and fortunately, there are a few ways employers can offer repayment assistance.
- Employers can allow employees who do not use all their allotted PTO to trade it in for money rather than carrying the time over into the next year. The cash out can be applied toward their student loans.
- Employers can set up a student loan repayment program that allows employees to contribute money toward their debt. Additionally, employers can choose to match the contributions.
- For a quicker, upfront strategy, employers can offer a signing bonus, in which a lump sum payment is offered to employees upon being hired.
While the blockage of the student loan forgiveness plan is a loss for many borrowers, it presents employers with the opportunity to differentiate themselves and offer their employees additional financial support.