Operations after student loan repayments resume

The resumption of federal student loan repayments on October 1 represents a significant challenge to tens of millions of borrowers across the United States. It may also become an unexpected issue for employers, who might see employees who already struggle with their savings be on the hook for an additional hundreds of dollars per month.

Seeing an opportunity to chip away at the issue, loan-focused fintechs have built a suite of HR-focused products and operational solutions.

Recalibrating benefits

In response to regulation facilitating loan repayment as an employee benefit, a suite of fintechs—like Candidly and Highway Benefits—have built out solutions that help employees save up to $358 per month through their solutions.

Employees can receive up to $5,250 in payments tax-free for addressing their largest personal debt; for employers, this benefit is a better dollar spent than a salary dollar or bonus dollar.

Gauging employee financial health

We should expect an uptick in employers interested in adding loan repayment as a benefit. However, employers have to be aware of the existence of these benefits, and have to gauge the specifical financial health, debt, and needs of workers before committing to benefits expansions.

“We’re in a unique position, not just within our industry, but within B2B, to use B2C tactics to engage with B2B,” said Mick MacLaverty, CEO & Co-Founder of Highway Benefits. These efforts include a toolkit for employees to pitch solutions like Highway Benefits to their employers, as well as extensive work on social media to help employees with student loan debt understand the existence and implications of this benefit.

“A lot of companies are astounded by the amount of employees that say a student loan benefit would be very desired,” MacLaverty said.

Advocating for reform

In the midst of this major stressor for US borrowers, employers have an opportunity to intervene more forcefully on their behalf to reduce the impact that student loans have on their workers. In addition to salary adjustments to reflect increased costs of living—including the long-term costs of education—they can pressure lawmakers through their advocacy groups to increase the amount of loan repayment that can offered tax-free, as well as other forms of borrower support to avoid a major macroeconomic shock.