When the Supreme Court rejected President Biden’s plans to forgive more than $400 billion in student loan debt on Friday, employers gained clarity on the financial wellness support that employees struggling with the burden of student loan repayments may need in the coming months and years.
Many organizations already were bracing for the ruling from the high court, which rejected the student loan forgiveness plan with a 6-3 vote in Biden v. Nebraska. Six Republican-led states had argued their revenues would be hurt by the president’s plan to forgive up to $20,000 in student debt for federal borrowers. In a related case, the court ruled that the plaintiff had no standing.
Experts had noticed renewed interest in student loan debt assistance programs for employees over the past several months, says Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute. He predicts those benefits from employers now will increase.
Employers kickstart renewed interest in student loan debt assistance
Over the past decade, employers began offering student loan debt assistance as a way to differentiate themselves for job candidates, boost financial wellness and serve as a retention tool. However, when the COVID pandemic hit, the federal government paused student loan payments for all borrowers and set interest to zero percent. And then came Biden’s proposal last year.
“[Biden’s proposal] put the brakes on employers’ student loan assistance plans, given everything that was happening with student loans at the time,” Copeland says.
Employers shifted their attention to emergency savings plans and helping employees’ more immediate financial needs as layoffs swept the nation during the height of the pandemic.
Consequently, the pre-COVID expectation that 40% to 50% of employers would be offering student loan debt assistance programs as we rolled into a new decade did not materialize, Copeland says.
In fact, according to the 2022 EBRI Financial Wellbeing Employer Survey, just 17% of respondents reported offering student loan debt assistance in 2021. Last year, the number rose to 25%, according to the survey.
The court’s ruling, however, and its impact on employee financial wellbeing likely will drive that number up again, Copeland says, predicting it could hit 40% in the next couple of years.
See also: Insurer adds student loan benefit to improve financial wellness
But for some, including Fidelity Investments, existing student loan assistance programs remain in place, unaffected by Biden’s proposal or the court’s decision. The financial services firm provides eligible employees who work 30 hours a week or more a lifetime maximum of $15,000 to apply to their monthly student loan repayments over seven years, says Megan Bourque, senior vice president and head of benefits at Fidelity.
In place since 2016, the program helps Fidelity’s HR team with recruiting and retention, she says, and it won’t change anytime soon.
“We remain committed to increasing access to financial education and have invested in tools, resources and services to help students, families and employers at every stage of the college journey,” Bourque says.
