American adults of all ages are impacted by student loans. They struggle with the stress of making their monthly debt payments and affording basic living expenses like food and housing. They have little funds left over to pursue additional education or make other purchases.
Currently, about $1.5 trillion is owed in student loans. Many people will spend at least a decade or two making payments on their debt. Financial experts advise those with college loans to pay off their debts as quickly as possible. But many will struggle to manage their finances. Workers want employers to assist them in resolving their financial worries. Here are three ways employers can help employees repay student loans and pursue educational goals.
- Educate employees on managing finances
Many employees are overwhelmed by the burden of their finances and often feel like giving up. They don’t see a solution to their problems. But employers can offer financial well-being programs, including educational resources and counseling to help workers to set financial priorities, establish a budget and save for the future.
- Assist with student loan payments
As part of employer financial well-being programs, businesses can offer assistance in repaying student loans.
Nearly 53% of millennials say student loans significantly impact their ability to save for the future. But employees age 60 and older are also burdened with student loan payments. Many Americans continue to pay on student loans even after they retire. About 31% of baby boomers ages 54-72 say they have stopped saving for retirement to pay off their student loan debts.
One simple and easy way employers can assist employees with student loan payments is by offering Employee Choice. This student loan repayment benefit is exclusively offered by BenefitEd and Ameritas. It’s designed to use funds employers already have set aside for 401(k) matching contributions.
The Employee Choice plan allows employers to stretch their benefits budgets because they don’t have to adjust the budget they’ve already set aside for matching contributions. Employees can apply unused matching dollars to help repay their student loans. Or, they can split the matching funds to make a payment to their student loan debt and save the remainder for retirement.
- Help employees pursue educational goals
Employees with student loan debt are hesitant to spend more money on educational programs. Although they are interested in continuing education to improve their professional skills, they may put off these expenses. Employers can help employees by offering a college 529 savings plan, which is generally used to save for a child’s or grandchild’s college expenses, but can be used by the employee, too. These plans allow employees to save for classes at a qualified college or trade school to further their education. In addition to tuition, the funds can be used for books or a computer as long as these items are used for education purposes. Read this blog to learn about how student loan debt impacts employees.