This article was originally published by Voluntary Advantage in the December 2024 edition of the Voluntary Benefits Voice. To read the full publication, click here; this article appears on page 21-22.
Just over a year ago, our CEO Dave Aronson had the opportunity to share insights with Voluntary Advantage on what employers need to know about student debt amongst their workforce. In that article, we talked about the burden student debt was placing on US employees as the administrative forbearance on student loans came to an end (October 2023), and individuals around the country were required to make payments on their loans for the first time in over three years. This occurred in addition to the June 2023 decision in the Supreme Court that put a halt to President Biden’s student debt relief plan.
In short, individuals were never impacted more by their student loans and these circumstances created a unique opportunity for employers to stand out by supporting employees in managing this debt.
They can do this by offering Student Loan Repayment services with direct contributions toward their team members’ loans, which in return, also helps them to get out of debt faster. This also helps the company change the way it attracts and retains talent.
I’ve personally had the opportunity to work with hundreds of employers this year that are thinking about offering a Student Loan Repayment plan. Today, everything we covered in our article last year remains just as true. Companies have continued to recognize that student debt isn’t going anywhere and their opportunity to make the greatest difference remains through direct contribution Student Loan Repayment solutions.
New wave ideas, like the verbiage in Secure Act 2.0 allowing employees to defer 401k matches toward their student debt have come about. However, they are often rejected by employers who do not believe that they are worth the administrative burden, confusion, or cost. For those who have implemented it, the solution is still new to the marketplace and results remained unclear on if they do improve key HR metrics.
The number of news articles about government-sponsored “student loan forgiveness” have also continued to increase, when in reality much of what has been shared has been proven to be misleading. In 2024, less than 2.5% of America’s $1.7 Trillion in student debt was forgiven, making the impact of these relief programs seemingly miniscule. In total, the current administration has seen forgiveness of $175.4 billion in student debt over its four year span in office. A further indication that no widespread forgiveness initiatives have been approved, nor will they be based on US court decisions during this current presidential term.
Student Loan Assistance Services provide a bright opportunity for employers to combat national student debt. With contributions often around $50 per-month made by employers toward their employees’ loans, companies can help their team members get out of debt in eight years instead of 10, saving more than $7,000 in principal and interest over the life of their loan. Creating an action item for organizations to maximize for a minimal cost, while driving debt down for employees nationwide.
These solutions appeal to many demographics in the workforce from young professionals, to specialists, and can even assist executive leadership of organizations in managing their own debt – as they often have advanced degrees that they may still be paying for. Organizations can expect 25% – 30% participation amongst their eligible population.
[1] https://www.whitehouse.gov/briefing-room/statements releases/2024/10/17/fact-sheet-president-biden-announces over-1-million-public-service-workers-have-received student-debt-cancellation-under-the-biden-harris administration/ (Department of Education – October 2024)
[2] https://issuu.com/voluntary-advantage/docs/vb_voice_- _july_2023?fr=sY2E5NjU4Nzc2MTA (Voluntary Advantage – July 2023)