On December 1, 2022, the U.S. Supreme Court announced that it will hear arguments about President Biden’s student loan relief program in February 2023 and blocked rollout of the program until then.
Continuing to offer or adding student loan repayment programs would help recruit and retain employees that have private student loans. The relief, if it happens, is limited to federal student loan balances before June 30, 2022. That means employees who had federal loans and refinanced them to private loans do not qualify for this and would highly appreciate this employer benefit. Consider for your future recruiting strategies that any new loans disbursed on or after July 1, 2022, aren’t eligible for this relief.
When the International Foundation released a survey report in September 2022, 11% of employers report they will be revisiting their strategy for student loan repayment benefits. Almost 60% of employers said they will not be changing their current policies, and 31% said they are unsure of plans to change repayment offerings.
Only 9% of responding U.S. employers currently offer student loan repayment benefits, 74% are not offering the benefit at all and 16% are not currently offering but are considering.
For employers offering student loan repayment benefits, 45% pay the employee’s lending institution directly, rather than provide extra compensation to the employee.
- 28% reported reimbursement or direct payment to the employee
- 21% said they offer refinancing of student loan debt
- 3% reported providing a corresponding “match” into the employee’s 401(k) or other defined contribution account.
Recruiting, Retaining, and Building Talent
Student loan repayment benefits have been slowly gaining popularity over the past few years, giving many organizations a leg up throughout challenging labor markets. When asked whether their student loan repayment offerings have been successful in achieving workplace goals, employers responded they have been successful in:
- Retaining staff – 45%
- Reducing staff financial stress – 45%
- Attracting staff – 31%
- Increasing staff engagement – 24%
The most common challenge faced by employers offering or considering student loan repayment benefits is perceived unfairness amongst employees (resentment from employees who do not benefit from student loan assistance, for example). This was reported by over half (52%) of employers. Other challenges include financial and administrative burdens.
Visit www.ifebp.org/studentloans for more information and a copy of the full report.