Student loan relief plan offers pivotal opportunity to advance worker financial security

Last month, the Biden administration announced a plan to provide financial relief to people living on low to moderate incomes (LMI) with student loans. As student loan forgiveness and income-driven repayment changes take effect, employers and service providers have an opportunity to facilitate savings, an important step in improving financial security and reducing the racial and gender wealth gap. Employees with reduced or eliminated debt payments can redirect at least some of these funds into emergency savings and be better prepared for unexpected expenses – a proven method to advance financial security.

The student loan relief plan has created a moment for employers and service providers to influence employees earning LMI through products and benefits that meet their needs, wants and aspirations.

The student debt relief plan forgives $10,000 in student debt for those earning less than $125,000, and $20,000 for eligible borrowers who received a Pell Grant for undergraduate study. It will also cut monthly payments in half for 65% of borrowers, reducing income-driven undergraduate loan payment requirements from 10% to 5% of a borrower’s monthly income. The plan is timely: federal student loan repayments have been paused since March of 2020 in an effort to provide relief to student loan borrowers, but that pause will end on December 31, 2022.