The Supreme Court denied President Biden’s student loan forgiveness plan on June 30,Optima Tax Relief Explains How Employers Can Offer Student Loan Aid to Employees Articles 2023. This has left many borrowers with the challenge of preparing for loan repayments as interest is set to begin accruing again on September 1, 2023, and payments due in October. With many struggling to work these payments into their budget, either again or for the very first time, the burden of student loan debt may hinder financial progress and impact long-term financial goals.
The Workplace as a Firewall
In response to the financial strain caused by student loan payments, forward-thinking employers are stepping in to provide their employees with valuable support. In 2021, the Employee Benefit Research Insititute conducted a survey that found that 17% of companies offer some type of student loan assistance and another 31% planned to offer some assistance within a year or two. Recognizing the importance of financial wellness for employee satisfaction and productivity, these companies are offering student loan repayment benefits, turning the workplace into a firewall against mounting student debt.
Employer Student Loan Repayment Assistance: Some employers are offering direct financial assistance to help employees repay their student loans. This benefit can be in the form of monthly contributions to the employee’s loan balance or a lump-sum payment.
Matching Contributions: Similar to retirement savings plans, some employers are providing student loan repayment matching programs. For example, if an employee makes a certain monthly payment towards their student loans, the employer matches that payment, effectively reducing the burden on the borrower.
Financial Education and Counseling: Employers are recognizing the importance of financial literacy and are offering resources such as workshops, seminars, and one-on-one counseling sessions to help employees better manage their student loan debt and overall financial health.
Contributions into a 401(k): Many employers are contributing to employee 401(k) accounts if they are paying off student loans. Some also offer access to 401(k) loans where employees can borrow money from their retirement fund to repay student debt.