Are Employers Revisiting Student Loan Repayment Strategies Now?

President Biden’s student loan relief plan is affecting employers’ considerations for student loan repayment benefits, according to a new survey report from the International Foundation of Employee Benefit Plans.

Eleven percent 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.

Program Structure
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.

[RELATED: Student Loan Repayment Options: The Key to Attracting and Retaining Employees]

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%

Challenges
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.