Student loan benefits become hottest work perk, in wake of SCOTUS ruling
Last month, the U.S. Supreme Court shattered young people’s hopes of student loan forgiveness.
The court ruled that the Biden administration does not have the authority to wipe out nearly half-a-trillion dollars in student debt, which would’ve provided relief to about 40 million Americans who stood to have up to $20,000 each in student debt erased. Now, President Joe Biden has moved to Plan B. Called the Saving on a Valuable Education (SAVE) plan, borrowers will be on an income-driven repayment plan, allowing many to make $0 monthly payments.
Still, people are worried about what their financial futures will look like when repayment starts, which resumes on Sept. 1. It’s providing an opportunity for employers to step up and provide additional support through financial benefits, like access to coaches or even employer-paid student loans.
“The SCOTUS announcement really put fuel behind the fire on why this is so important,” said Rachel Romer, CEO of career opportunity platform Guild. “We do hope the federal government continues to find ways to help this worker population, but in the meantime, we think there’s a lot we can do to harness the private sector with innovative solutions to help this group.”
That’s why Guild announced a new partnership with AI-driven student debt and savings optimization platform Candidly to expand their offerings past debt prevention into employer-paid student loan benefits for the employees they serve. Beyond that, though, is access to certified student loan professionals to help them optimize their current loans, create structured ways to save and automate savings, and provide assistance with the new income-driven repayment plans.
When Guild surveyed its members, nearly two-thirds expressed that their prior loans have impeded their career advancement. Among Guild members with student loans, a notable 80% expressed their intention to stay longer with employers who offer student loan benefits.
So far, the pilot program has helped 12,000 Guild members. Those enrolled in income driven repayment plans through Candidly have saved an average of $319 a month in student debt payments. People who engage with Candidly’s certified loan coaches end up saving up to $25K in lifetime student debt.
“There is a need across the members that Guild is already serving,” said Laurel Taylor, founder and CEO of financial wellness platform Candidly. “Saving $319 a month can be life-changing. Those dollars can be repurposed for savings or the daily demands of life, which are more extreme than ever.”
That money is saved largely by helping users discover, select and enroll in federal savings programs that they might not have been familiar with before. Candidly also helps facilitate employer-sponsored contributions that are tax free up to $5,250 annually. So far, the platform has seen over $28 million of student loan repayment by employers. And 60% of employers that are launching Candidly are launching with a contribution. However, that contribution ranges anywhere from $50 to $500 a month.
“The work to optimize your current loans and package them appropriately, to structure, save and drive automated savings, and to have assistance, is all as valuable to an employee as the employer contribution part,” said Romer. “Every employer should look at what they can do and do the maximum that works for their company.”
But more than just saving money, the employee is receiving a benefit from work that stands above the rest.
“You have a huge impact on retention of talent,” said Taylor. Their data found that those employees are 76% less likely to leave the company.
Having a company assist with repaying student loans directly isn’t really a widespread benefit yet. However, even just offering access to coaches and information, it’s a factor in employee retention. Employers offering Candidly’s tools, absent of the student loan repayment, still see a 33% reduction in turnover.
The SCOTUS news was an opportunity for employers to consider if they are interested in stepping up to fill the gap, especially if they want to use it to attract and retain talent. However, it does take time for employers to organize their budget and actually deploy these plans. Taylor expects that we will begin to see more and more employers offering it as a benefit over the next year.
“This is not a minority issue,” said Taylor. “The data is clear that this is an extremely compelling lever. There is an absolute panic happening. We have been in a three-year moratorium of student loan payments. The number one need right now is for guidance.”