Help Pay Off Student Loan Debt for a Competitive Advantage

Posted on: April 2, 2024

Today, millions of prospective employees are looking for a specific benefit in their job offers, but few are finding it. They receive employment packages featuring flexible hours, sign-on bonuses, training opportunities, generous time off, great health and wellness benefits, and other attractive rewards. But what they really need is help repaying their student loans.

Many businesses say they don’t have the budget to assist employees with student loan payments. Or, they’re concerned about providing equitable benefits. There are ways employers can help these millions of employees by offering relevant benefits that don’t take away from other employees—and don’t heavily impact their budgets.

Address Employees’ Real Concerns

In the past, employers only had to offer an attractive mix of benefits and incentives to sway employees to join their teams. But the times have changed. With millions of skilled workers quitting their jobs in the past few years as part of the Great Resignation, businesses have had a difficult time hiring and retaining qualified individuals. Now to attract and retain top talent, especially for key positions, businesses need to provide benefits that address prospective employees’ most pressing needs, such as student loan repayment assistance.

Employees of All Ages Have Student Loans

The Federal Reserve reports that approximately 44 million Americans owe more than $1.77 trillion in student loans.1 A recent TransUnion study found that student loan borrowers carry an average balance of about $35,000.2 You may think of younger employees as being more burdened by student loans, but paying off college is a financial drain for those of all ages. While fewer Gen Xers (born between 1965 and 1980) carry student loan debt, they tend to have higher balances than millennials (born between 1981 and 1996) and Gen Zers (born between 1997 and 2012).

Pie chart showing percentage of student loan debt holders by generation: Gen Z 28%, Millennials 43%, and Gen X 21%, and bar chart showing amount of average outstanding debt by generation: Gen Z $24,473, Millennials $42,637, Gen X $48,733.

Source: TransUnion

Student debt isn’t just an issue that applies to specific demographics of the workforce, it’s universal.

Offer Support with BenefitEd

Many borrowers are struggling to fit their federal student loan payments into their budget after a three-plus year payment pause. U.S. Department of Education data showed that, after federal student loan repayment resumed in October 2023, only 60% of borrowers had made a payment by mid-November.3 For many workers, the loan repayment amount is equivalent to a car or home mortgage payment. A survey of graduating college students with student loans found that 59% of them expected to have a side hustle or take a second job in order to make their loan payments.4

With so many employees of all ages dealing with student loan debt, offering a benefit to help with student loan payments is a great way to gain a competitive advantage in recruiting and retaining top talent, while also reducing employee financial stress.

BenefitEd’s Employer-Assisted Student Loan Repayment program allows employers to help their employees pay back their student loan debt through direct contributions or matching programs. Employers simply choose who receives the loan repayment benefit and how much to contribute, and BenefitEd takes care of everything else, easing the administrative burden on employers.

Employees with student loan debt often struggle to find money in the budget to contribute to their retirement plans, leaving employer match dollars on the table. Now with provisions from SECURE Act 2.0, employers can recognize their employees’ student loan payments as qualifying contributions to their retirement plan, allowing them to start taking advantage of employer match dollars. BenefitEd can help employers set up these and other provisions of SECURE Act 2.0 that help employees plan for a brighter future.

Win the Talent War

Employers can gain an edge in the talent war with Employer-Assisted Student Loan Repayment from BenefitEd. With this benefit, businesses can assist employees in repaying student loans and creating brighter financial futures. Prospective team members will be drawn to these companies because they’ll want to work for an employer that truly cares about their employees’ needs and concerns.

Many savvy employees have followed news coverage of SECURE Act 2.0 leading up to its implementation starting in this calendar year. These smart employees will search for and ask employers about setting up their retirement plans to recognize student loan payments as contributions. Using SECURE Act 2.0, employers can help their employees with student loans start saving for retirement while they pay down debt. Offering this benefit is simple to do and can provide employers with a competitive edge.

Interested in Learning More?

Contact us today to learn more about Employer-Assisted Student Loan Repayment. We can also assist you in using provisions of SECURE Act 2.0 to recognize student loan payments as qualifying contributions to your retirement plan, helping to reduce financial stress for your employees with student loan debt.





Editor’s Note: This post was originally published in February, 2022 and has been updated for accuracy and comprehensiveness.