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Last Update: August 9, 2021

Despite the focus on student loans, the student loan debt crisis continues to grow, with students borrowing approximately $102 billion for the 2019-20 school year1

U.S. News compared borrowing over the last ten years and found that although the percentage of students who borrowed dropped from 68 percent to 65 percent between 2009 and 2019, those who took loans had balances more than $6,000 higher2.

Trying to determine the “why” behind the crisis has been difficult at best. But here is what we do know:

  • 65 percent of jobs require at least an associate’s degree3
  • Pell Grants covered 79 percent of public school tuition, including room and board in 1975 and just 29 percent in 20174
  • State appropriations for public higher education have fallen by 30 percent since the 1980s, leaving students and parents to make up the difference5

Regardless of the reason, the student loan debt reached $1.7 trillion by the end of 2020, and many of your employees are feeling the pinch of this debt.

Employee Stress Over Student Loans

According to the Federal Reserve, 44 million Americans have student loan debt.

With the current full-time employed population at 123.98 million6, that means that one out of every three of your employees is trying to pay off student loans. 

A recent poll conducted by Morning Consult7 found that 64 percent of adults feel stressed about their student loan debt. This is higher than the stress felt by carrying any other debt:

  • Credit card debt – 60 percent
  • Mortgage debt – 42 percent
  • Car loan debt – 42 percent

Studies show that financially stressed employees are less productive, have higher absenteeism and presenteeism, participate less in company-sponsored 401(k)s, have more accidents, and are more likely to look for other employment8.

As a result some companies are considering adding student loan repayment assistance as an employee financial wellness benefit.

What is Student Loan Repayment Assistance?

Student loan repayment assistance is a benefit you can offer to employees to help pay off their student debt. Different companies offer to pay different amounts, and these payments are made directly to the lender. 

Before the pandemic, fewer than 1 out of 10 employers9 offered this benefit to their employees.

The Society for Human Resource Management (SHRM) found, however, that one out of three would offer this benefit if they didn’t have to pay taxes on the payments. As of March 2020, that is now the case.

To learn more about student loan repayment assistance, check out The Ultimate Guide to Employer Student Loan Benefit Programs.

New Tax Incentive Increases Participation 

With the passage of the CARES Act and the recent passage of the Consolidated Appropriations Act (CAA)10, employers can make tax-free contributions toward student loan repayment through 2025.

Many officials believe this provision will become permanent.

With this provision, employers can contribute:

  • $5250 per year ($437.50 per month)
  • Tax-free

As an added benefit, employees don’t have to pay taxes on these contributions either.

Because the passage of (CAA) happened so recently, it is impossible to say how many companies will decide to offer this benefit to their employees. However, the new tax incentive makes it more affordable for companies to do so. 

Student Loan Repayment Increases Employee Retention

One reason you might want to consider offering student loan repayment assistance is to attract and retain a diverse and quality workforce.

The Prudential Pulse of the American Worker Survey11 found that 80 percent of American employees want benefits that help their financial well-being. And, just as importantly, if their employers don’t offer these benefits, they will look for employment elsewhere.

Hiring new employees is costly. From hiring teams and HR to salaries and training, turnover costs range between 90 and 200 percent of an employee’s annual salary12.

That’s why it makes sense to learn what financial benefits employees want and find ways to offer them. For many employees with student loan debt, student loan repayment assistance can be more valuable than a raise or even healthcare.

Another financial benefit to consider is an employee financial wellness program that can help employees learn about and understand financial concepts, gain important financial skills, and create strong financial habits.

When paired with other financial wellness benefits like student loan repayment, 401(k), or Employee Assistance Programs, a financial wellness program can help employees feel confident about their finances and loyal to your company.



1 - https://fred.stlouisfed.org/series/SLOAS

2 - https://www.usnews.com/education/best-colleges/paying-for-college/articles/see-how-student-loan-borrowing-has-risen-in-10-years

3- https://cew.georgetown.edu/cew-reports/recovery-job-growth-and-education-requirements-through-2020/

4 - https://www.cbpp.org/research/federal-budget/pell-grants-a-key-tool-for-expanding-college-access-and-economic-opportunity

5 - https://www.amazon.com/Why-Does-College-Cost-Much/dp/0190214104

6 - https://www.statista.com/statistics/192361/unadjusted-monthly-number-of-full-time-employees-in-the-us/

7 - https://morningconsult.com/wp-content/uploads/2019/10/190963_crosstabs_MONEY_Adults_v3_JB-1.pdf

8 - https://www.pwc.com/us/en/industries/private-company-services/library/financial-well-being-retirement-survey.html

8 - https://www.ehstoday.com/health/article/21917550/burnt-out-stress-on-the-job-infographic

9 - https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/pages/pass-tax-relief-for-student-loan-repayment-benefits-shrm-says.aspx

10 - https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-116HR133SA-RCP-116-68.pdf

11 - https://news.prudential.com/presskits/pulse-american-worker-survey-road-to-resiliency.htm

12 - https://toggl.com/blog/cost-of-hiring-an-employee

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