Student loan borrowers are facing a brutal new era, as the Trump administration begins to garnish the wages of people in default, and millions who were part of a Biden-era repayment program are hit with interest payments once more. The slow-motion crisis is only getting worse, but there are ways for employers to step in and help workers who are feeling the pinch.
There are several benefits that companies can offer employees struggling under unwieldy debt burdens, including matching student loan contributions to retirement plans, PTO exchanges, financial planning counseling, and education assistance programs.
But half the battle for business leaders is convincing their company’s top brass that they should even offer these benefits in the first place. Only 9% of organizations offered student loan benefits in 2024, according to SHRM’s employee benefits survey. While that’s an increase from 7% in 2022, the vast majority of businesses still don’t offer any kind of assistance to employees.
Fortune spoke with several student loan benefit experts about how to make the case for offering the perks that are still rare, but increasingly relevant.
“It’s been an evolution and the recognition that student loans are here to stay, and, quite frankly, that the student loan debt crisis is real,” says says Stacey MacPhetres, senior director of education finance for EdAssist by Bright Horizons, which offers tuition assistance and student loan repayment benefit plans. “Employers are starting to recognize that it is a necessary benefit, and no longer a nice to have.”
Cultivating loyalty
Garnishing wages has a huge impact on personal finances, and can dramatically affect a borrower’s credit score. That can further impact someone’s ability to get a car or home loan.
“It’s like an economic earthquake ripping through those who are part of our workforce that have pursued the degree to get the job in the first place,” says Laurel Taylor, CEO of Candidly, a financial wellness company. She adds it’s not just an issue only for young people or new graduates, but includes people in their 30, 40s, 50s and beyond.
Employers who acknowledge the stress that employees are under, and show up with benefits to try and address those problems, have the opportunity to cultivate a feeling of appreciation among workers.
“This is a chance to demonstrate, from an employer’s perspective, empathy. To build loyalty and differentiate that employer brand in a very fiercely competitive talent market.”
Student loan benefits as recruitment and retention boosters
Many companies that choose to offer student loan assistance do so as an incentive to keep employees around, and discussing the benefit in terms of ROI can help employers make the business case for that kind of perk.
Employees with more debt are more likely to job hop—around 61% of employees without debt were willing to stay with their current employer compared to 39% of borrowers, according to a report from MissionSquare Research. Taylor says her clients that offer those benefits reduce turnover by an average of 33% to 58%, while employers that traditionally have higher levels of turnover, like hospitals, can see turnover reduction of 76%.
Offering student loan benefits can also help a company stand out when it comes to recruiting new employees. Businesses shouldn’t be afraid to tout their offerings, especially in job ads or during candidate interviews, notes Ted Kane, a partner at insurance brokerage firm Brown & Brown.
“If I’m choosing between employer A and employer B, and I’m going to get a student loan repayment, I’m going to employer A, unless there’s a big difference in salary,” he says.
Focus on programs that don’t cost extra
One of the main criticisms of offering student loan benefits is that they’re not cheap. But there are many options out there for business owners that won’t actually cost them extra money.
Under the Secure 2.0 Act, passed in 2022, companies can take the funds they would have used to match employee retirement contributions and instead use them to help them pay off student loans. PTO exchange programs also allow employees to take any unused time off and convert it into cash for loan payments. Finally, employers can offer to turn a sign-on bonus into a monthly student loan contribution over a number of years, according to MacPhetres. These kinds of programs tend to be an easier sell for leadership, because the money is already budgeted.
The new normal
While student loan benefits are still offered by a minority of companies, experts say they’re gaining steam.
“It used to be that companies would give access to refinancing, maybe as part of a voluntary benefit platform. But now they’re looking to actually repay the loans,” says Kane, who estimates around half of employers he comes into contact with are at least thinking about these perks.
When wage garnishment begins, companies will be confronted more directly with the severity of their workers’ financial situations, says MacPhetres. Student loan benefits today are where retirement savings accounts were in the 1980s, she adds. Something that’s nice to have now, but will one day turn into absolute must.
“This is something that comes up in every conversation with employees as they’re navigating their futures, and I think employers are starting to take notice.”
