Employee benefits 2021: student loan repayment assistance programs. The different kinds of employer student loan repayment programs and why more employers plan to add them.
Student loan benefits emerged to help employees with their share of the $1.6 trillion in student debt. They’ve been hailed as an important employee wellness initiative and as a way to attract and retain talent. According to research by MetLife, student loan repayment assistance is now a must-have benefit for 36 percent of Gen Z and 29 percent of Millennials.
Employers who are considering adding student loan repayment benefits in 2021 should review the different types of programs that are available and zero in on the one that’s right for their workforce.
Employee Benefits 2021: Employer Student Loan Repayment Assistance Programs
According to research by PwC, just 7 percent of employers currently offer student loan repayment benefits (with the average employer offering $1,800 per year), but another 27 percent are considering it as they build their benefits package for the next year.
Nearly 15 percent of employers offer student loan refinancing or consolidation, programs that give employees an opportunity to restructure their student loans for more favorable interest rates and loan terms.
401(k) student loan matching is a relatively new program that the IRS approved in 2018. It allows employers to match student loan payments with a contribution to an employee’s 401(k). None of the employers PwC surveyed offered 401(k) matching on student loan payments, however, 23 percent of organizations are assessing its potential.
How Financial Wellness Can Help
The student loan benefit employers were most likely to offer was access to tools that have financial advice and financial coaching. Nearly 25 percent of employers already offer it and 22 percent of employers are considering adding it to round out their benefits offerings.
Student loan debt is just one source of financial stress for employees. According to Clever Real Estate, 54 percent of Americans missed or deferred at least one payment in 2020 for bills including:
- Student loan payments (45 percent)
- TV, internet, or phone bills (34 percent)
- Credit card bills (30 percent)
- Medical bills (30 percent
- Electric, water, or other utility payment (27 percent)
- Rent (21 percent)
- Mortgage (21 percent)
Their top reasons for missing a payment included:
- Paying for food or groceries instead (37 percent)
- Prioritizing other debts (33 percent)
- Lost income (28 percent)
- Covering an unexpected emergency (25 percent)
- Prioritizing rent or mortgage (24 percent)
- Paying utilities (22 percent)
- Forgetting to Pay (18 Percent)
- Spending too much on nonessentials (15 percent)
Financial stress is clearly a multifaceted problem and the route to financial wellness looks a little different for everyone. Financial wellness programs like Best Money Moves are expansive end allow for personalization and customization, helping employees look at their overall finances, their financial goals and then directing them to resources that can help them bridge the gap.
Best Money Moves has all the essential budgeting tools employees need to assess and track their finances, but then they go above and beyond. Best Money Moves has a library with over 700 articles, videos and calculators to help workers educate themselves on everything from taking out student loans to buying their first home to saving for retirement. When employees have financial questions that need answers, Best Money Moves has a team of money coaches ready to help. And, of course, employee information is always private.
If you want to learn more about how Best Money Moves can bring financial wellness to your company download our whitepapers and sign up for a demonstration here.