Go beyond a basic 401(k)

Go beyond a basic 401(k)

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5 min read

Student Loan Assistance: How Employers Can Help With Student Debt

Evan Ross
August 22, 2019
Student Loan Assistance: How Employers Can Help With Student Debt
Table of contents

There’s a student debt crisis unfolding in the United States. It's the invisible, leaden backpack of the American workforce. While there are some solid loan-relief tactics for individual borrowers, the problem is just too big. Employees need help on a larger scale.

There’s good news. Employers can do more for their indebted employees than just forking over a paycheck. A lot more. And it pays off for everyone involved.

Interested? Here’s the situation:

The Scale of the Student Debt Crisis

The majority of college graduates are burdened with some level of student debt. That alone is a pretty unsettling statistic, but it doesn’t quite do justice to the true magnitude of the problem.

According to Forbes: “Nearly 7 in 10 seniors (68%) who graduated from public and non-profit colleges in 2015 had student loan debt.” For public college grads, the average loan balance is $25,550. Private colleges: a whopping $39,950.

On a national level, student loan debt is higher than credit card debt and auto loans. Let’s face it: owing money for your education is the norm for employees under 40.

It’s also worth noting that rising costs of education (including living, medical care, and housing), coupled with sluggish wage growth means that debt has been harder than ever to pay off. And so employees are doing their jobs and living their lives with debt - and all its deleterious effects.

With student debt payments climbing and no end in sight, employers are stepping in to help.

Why Should Employers Care About Employees’ Student Loans?

“Because I love my employees and feel the need to lessen their woes” is a great answer, but love or not, financially stressed employees are also costing your business.

According to a report from the International Foundation of Employee Benefit Plans, four out of five employers report that their employees’ personal financial issues are impacting their job performance. The average time spent worrying about finances while at work was 13 hours/month, putting approximately 5% of the payroll “at risk” from lost productivity.

On a national level, that can add up to employers losing over $250 billion a year over employee stress. The number one cause of that stress? You’ve definitely gotten the picture since sentence #1… the answer is debt.

In an ideal world, your employees are always happy, healthy, and productive. But financial stress will mess with happiness, health, and productivity, and ultimately, hurt your bottom line. Student debt might feel like a very individual problem, but on this large a scale, it’s something many businesses have to tackle.

But let’s not focus on the negative. It’s not all about loss prevention. Being an employer who offers student loan assistance has some very real benefits. Chiefly, businesses with this type of benefit are better positioned for attracting (and retaining) talented individuals.

So, clearly, caring about employees pays off. Here’s how employers are helping:

How Employers Are Helping Their Workforce

It turns out that one of the best ways to help employees with their financial stresses is to give them financial knowledge. Companies invested in their employee’s performance will often offer financial education or wellness training and support.

Financial education can help employees analyze their spending, organize their assets, and develop plans for meeting their financial goals. That means everything from setting up a student loan repayment plan to contributing to a retirement plan.

Financial education, often in the form of a financial wellness service, is a popular and highly effective tactic. Unlike student loan repayment assistance, this doesn’t just help pay off the loan, it helps employees get organized and intelligent about all their finances, including their student loans. The long-term value of this cannot be easily overstated. Additionally, some employers are even offering student loan repayment assistance programs as a benefit.

There are student debt solutions for employees to pursue individually as well. So it’s worth knowing...

How Employees Can Tackle Their Student Debt

There are a variety of strategies to help employees manage debt. We’ve laid out the major tactics in the table below.

Federal Loan ForgivenessSome student loans can be forgiven by spending time working in public service. The Public Service Loan Forgiveness program (PSLF) for example, allows students to pay off certain student loans through 10 years of government employment.

There are special programs for public service careers including doctors, nurses, military, teachers, lawyers, and more.
Education & Financial GuidanceSometimes just even navigating all those repayment options above is too much for the average borrower. Financial education and wellness initiatives can help provide the required guidance and help you pick the right tactics.
Student Loan RefinancingCombine loans to have a single interest rate and monthly payment - often lower than the original interest rates. Pretty common, but better done with an advisor.

For the individual, it’s not always easy to determine the best route to financial freedom. Mainly, it depends on a variety of factors, including the amount of debt, how long it will take to pay off, and the type of degree it was used to obtain.

A recent sociology graduate, for example, might be able to get their loans forgiven by spending a few years in social work, but an engineer with multiple degrees (and loans) might consider refinancing.

Aside from encouraging employees to leave for federal employment, these strategies can also be adopted and supported by companies. For employers who want to offer student loan assistance, the first step is learning about your employees. Which leads us to:

5 Questions for Employers Who Want to Help

If you haven’t considered this kind of program before, here’s a good place to start. Get to grips with the student debt situation at your business by finding out the following:

  1. What proportion of your workforce is dealing with student loan debt?
  2. If they have student debt, is it their own, or are they working parents who are also borrowing to send their kids to college?
  3. What is more important to your employees: saving for retirement, or paying off student loans?
  4. What level of student debt are your employees generally dealing with?
  5. What student debt solutions are your employees already using?

Once you’re equipped with those answers, you can get to work on being the hero.


It’s pretty clear that student debt is a widespread issue. The United States workforce is weighed down by their education debt, and it’s time for employers to realize the power they have to bring an end to the crisis.

Between financial education, student loan assistance programs, and refinance options, student debt doesn’t have to be the end of the world - or a drain on your profits. Implement a student loan repayment benefit today at your company, so you - and most importantly, your employees - can start reaping the benefits.

Go beyond a basic 401(k)
Give your employees more than just a 401(k), join the movement.
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Evan Ross
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1 Schwab 2022 401(k) Participant Study - Gen Z/Millenial Focus, October 2022.
2 As of 12/31/2022. Employees include both current employees and terminated participants with a balance.
3 "Morgan Stanley At Work: The Value of a Financial Advisor" Morgan Stanley, March 2022.
4 Sarah Britton was a client when she provided this testimonial through an independent third party review website. She received no compensation for her remarks. There are no known conflicts of interest in the provision of her comments related to the services provided.