Employees will ask for help – what can employers do?

Employees will likely seek help in the months ahead due to the re-emergence of student debt servicing. Employers should be prepared to provide resources to help employees grapple with financial stress and the new pressures the resumption of federal student loans may trigger. To prepare, here are three key actions employers can take right now:

Inventory all available resources first, particularly if they are already included in the broader benefit plan. Typically, benefits found in employee plans have some component for financial well-being that can help with a number of issues such as managing student debt. For example: (1) The retirement savings plan may offer budgeting, saving tips and planning resources; (2) the life and disability plan may have wealth accumulation and asset protection information and tools; and (3) Employee Assistance Program may offer debt management resources and counseling assistance.
Understand how these various benefits can help, how they may interact across platforms and what service gaps and resources still exist. From there, you can decide which resources to leverage and what benefits to add.
Consider tuition assistance programs and student loan assistance programs. This decision is more costly and requires a detailed understanding before introducing either or both.

Tuition assistance programs

Tuition assistance is a long-standing benefit that employers offer to help employees pay for ongoing education. Similar to most benefits, the scope of the support provided can be customized by an employer and could include the following:

Tuition reimbursement for approved degrees or programs up to a defined limit
Educational stipends for continued education;
1. Professional development funds for programs related to the profession
2. Scholarships and grant awards for employees and dependents for a defined purpose or program

Student loan assistance programs

Student loan assistance programs help employees manage debt accumulated from past education expenses. These programs can provide support and guidance for employees, helping them navigate their options and reduce their debt as much as possible. Some common offerings include the following:

Loan repayment assistance with an employer- funded monthly benefit payment. Typical employer contributions are $100 -$200 per month in assistance for employees actively paying off their loans. Currently, employers can provide up to $5,250 in student loan repayment annually as a tax-free benefit for employees.
Student loan assistance resources, such as digital and personal consulting resources to help with budgeting, can help your employees learn to save and best manage their loans. These services can help employees consolidate loans, refinance to lower interest rates, learn about their Income-Driven Repayment (IDR) options and opportunities for debt relief, and complete and submit complex government loan forgiveness applications.
In 2024, the SECURE 2.0 Act will help address the financial reality that many employees face limited budgets and may not be able to pay off a student loan and contribute to their 401(k). The law will allow employers to provide 401(k) contribution matches based on the employee's student loan payments

The employer benefits

To evaluate the positives that stem from student debt-related benefits, consider these potential business outcomes:

Attracting and retaining top talent. Student loan assistance can help employers attract and retain highly skilled and talented individuals, especially among recent graduates burdened with student loan debt.
Enhanced employee productivity. Employees with financial worries may experience reduced productivity and increased stress. Employers can improve overall employee well-being and job performance by alleviating the burden of student loan debt.
Competitive advantage. In a competitive job market, offering student loan assistance can differentiate an employer from others and position the company as an employer of choice.
Diversity & inclusion. These programs can promote diversity and inclusion by making it easier for employees from diverse backgrounds to pursue higher education and career opportunities with less worry about the associated expense.
Employee loyalty & engagement. When employees feel supported and valued, they are more likely to be engaged and committed to their work, leading to an improved overall workplace culture.

Other benefits supporting employee financial health

Financial stress affects all employees. Student debt is just one of many stressors. A diverse workforce comprised of people with different incomes, obligations and life stages will require a variety of benefits in a personalized way. In addition to student loan assistance programs, other impactful financial well-being strategies and benefits to consider are:

Financial counseling and education: Offer workshops, webinars, or one-on-one sessions with financial professionals to advise on topics such as budgeting, investing, and retirement planning.
Discount programs: Offer employees access to discounts on commonly purchased goods and services for both local businesses and national chains.
Insurance options: Beyond the standard health and dental, consider offering voluntary insurance options like pet insurance, accident insurance, hospital indemnity or critical illness insurance to protect from loss and mitigate unexpected out of pocket costs.
Medical savings accounts: Implement and promote Flexible Spending Accounts (FSA) or Health Savings Accounts (HSA) which allow employees to set aside pre-tax money for out-of-pocket healthcare or dependent care costs.
Child and elder care financial assistance: Provide access to resources to help navigate care situations and offer subsidies, savings accounts, or insurance options to help offset the costs of caring for dependents.
Transportation benefits: Subsidies or reimbursements for public transit, carpooling, or rideshares services. Some employers also provide benefits for bicycle maintenance.
Salary advance programs: Allows employees to access earned but unpaid wages before the regular payday
Emergency savings programs: Help employees set up and contribute to an emergency savings fund, perhaps with a small company match to incentivize saving.
Automated savings programs: Integrate tools into the payroll system that automatically route a portion of an employee's paycheck into a savings account.
Short-term, low-interest loans: Help employees avoid high interest pay day loans and offer access to reputable vendors who offer short-term loans for emergencies with the ability to pay loans back through payroll.
Payroll purchasing options: Provide access to marketplace purchases of more costly goods like computers or household appliances with the ability to pay them off over time through payroll deduction and avoid credit card debt.
Home buying assistance: Provide workshops, savings match programs, or access to competitive loan rates to support employees in purchasing a home.

Related: Student loan debt: More employers offering repayment benefits

When the federal student loan repayment process resumes in October, the need for these programs will be greatly magnified and instigate many employee questions and requests. Employers should start preparing now so they can best support their employees and ultimately enhance their workplace offerings.

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Payment due! As student loan payments resume, employers can take these key actions

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