student loan assistance Archives

Employee Benefits 2021: Employer Student Loan Repayment Assistance Programs

by LizStevens | Nov 18, 2020 | Blog

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.

How COVID-19 Impacts Your Student Loans

by ryanwangman | Mar 27, 2020 | Blog

How COVID-19 impacts your student loans. What you need to know about the new federal freeze on student loan interest and student loan payments.

Following action taken by the Federal government in response to the 2020 COVID-19 pandemic, federal student loan borrowers no longer need to take any action to suspend payments — your federal loan servicer will freeze them automatically. There are some student loans that are not eligible for this automatic suspension, including federal student loans under the Federal Family Education Loan (FFEL) Program loans that are owned by commercial lenders, select Perkins Loans held by the institution you attended and private student loans.

If you have private student loans, reach out to your loan server if you are in need because you have to continue paying principal and interest.

For more details regarding federally held student loans and whether or not your loans qualify for forbearance, refer to StudentAid.gov.

How COVID-19 Impacts Your Student Loans

While there may have been many headlines about freezing student loan payments over the past few months, the process of halting student loans is not as simple as a headline would make it appear. There have been multiple changes over the course of March, 2020 that affect borrowers and loan suspension.

In early March 2020, the Trump administration announced that Federal Student Loan Interest rates will be reduced to 0 percent for a period of 60 days beginning March 13, 2020. Later that month, the federal government announced individuals can suspend their payments for a period of 60 days if they request it. Then, at the end of March, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, provided the automatic suspension of principal and interest payments on federally-held student loans through September 30, 2020.

“The biggest problem is that the media is making it sound like all you have to do is stop making your payments,” said Joel Carter, spokesperson for student loan company GotZoom. “But, then you’ll be reported as paying late. What you need to do is contact your loan servicer and request forbearance.”

According to a Department of Education press release from March 20, U.S Secretary of Education Betsy DeVos commanded all federal loan services to grant an administrative forbearance to any borrower with a federally held loan who requests one.

This process is open to all loan holders — both active and in default — and based solely on request and not on the typical administrative approval process. Borrowers have to contact their loan servicers to request the payment freeze. There is no clear response time for these requests.

What to Think About Before Requesting a Payment Freeze

Before deciding to use this new process, borrowers must consider their situations to make the best decision for themselves. For some, it might make sense to continue to make payments.

Those who are in stable financial situations in the short term might consider continuing their payments as any payment conducted during the 60-day time period will be applied directly to the loan’s principle. For them, paying could speed up their loan paying process.

Participants in the Public Service Loan Forgiveness program, who are required to make 120 payments before the loan is forgiven, might also consider making payments.

How Bad Is the Student Loan Crisis?

by LizStevens | Mar 5, 2019 | Blog

How bad is the student loan crisis? Student loan assistance is becoming a popular employee benefit for employers who want to help workers reduce financial stress from student loan debt.

Over 70 percent of Millennials say they’ve delayed decisions like buying a home or having children because of their student loan debt, according to a recent survey by Bankrate.

“There’s a huge toll being taken on individuals and the U.S. economy from the growing burden of student loan debt,” said Bankrate’s Senior Economic Analyst Mark Hamrick. “For the huge slice of the American population with debt, it is necessary to juggle competing goals including saving for emergencies and retirement as well as major life decisions.”

Student Loan Debt Regret

Nearly 80 percent of Millennials would have approached their college finances differently in hindsight. More than half of Millennials would have applied for more scholarships than they did. Others would have attended a cheaper university, opted for community college or trade school, or majored in a different field.

“Many families are now striking out to investigate college campuses as they begin studies this fall,” said Hamrick. “For those prospective students and their families, many of who will help them to pay for their secondary education, we’d urge them to investigate all possible options for financial aid including scholarships to limit their borrowing.” He goes on to suggest: “Their options also include attending a lower-cost school such as those in-state as well as more economical trade schools and community colleges.”

Families can help children approaching college make better decisions about student loans now, but what about the Americans splitting the $1.5 trillion in student loan debt the U.S. has already generated who aren’t meeting milestones or saving for retirement?

Employee Student Loan Assistance

Employers are coming up with solutions to help employees pay down student loan debt and get back on track with saving for retirement. Some companies are allowing workers to transfer up to five days of paid time off for payments against student loan debt. Other programs offer student loan refinancing or allow employers to match employee 401(k) contributions with student loan repayments.

Lawmakers are working to expand existing legislation that allows companies to offer up to $5,250 in tax-free tuition reimbursements to include $5,250 in tax-free student debt relief for workers in an attempt to further motivate employers to offer student loan assistance benefits.

Student loan debt assistance is still a new benefits offering, but it’s developing rapidly to meet the need to address the $1.5 trillion issue that’s stressing Americans out and keeping them from financial security.