Plan sponsors should do their homework before offering student loan assistance

Jay Schmitt, ASA Thought Leadership

The cost of a four-year education increased 213% from 1988 to 2018, according to the College Board—and that’s after taking inflation into account. Runaway tuition increases finally slowed down this year—for the first time in decades—because of the coronavirus, but overall student debt has only increased during the pandemic, data shows. With an estimated 35% of jobs now requiring at least a bachelor’s degree, according to Georgetown University, more than 44 million graduates have had little choice but to enter the workforce with student loan debt.

These types of loans, as well as other financial baggage, can be a distraction that diminishes employee productivity, causes stress and anxiety, and may prevent employees from achieving their financial wellness goals, such as saving for retirement. In response, employers have recently begun introducing benefit programs designed to assist employees with their student loan debt.

Now may be a particularly opportune time for plan sponsors to consider launching a student debt relief program, as the Trump administration’s COVID-19 stimulus bill passed in December has temporarily suspended income taxes on all employer contributions toward student loans. Here are steps you can take to determine if student loan assistance might be a benefit your employees would value.

This is an excerpt. Read the full article in PLANSPONSOR.