4 Ways To Help Employees With Defaulted Student Loans!

Explore actionable ways to assist employees with student loan default. From flexible matching to expert advice, enhance financial well-being.

7 million student loan borrowers struggle with defaulted student loans. Discover effective strategies to support your employees facing student loan default. From a Flexible Matching Program to expert financial advice, explore ways to alleviate the burden and foster financial well-being. #EmployeeSupport #LoanDefault

With one in six Federal Student loans in default, the burden of student loan debt is an all-consuming reality for 7 million borrowers. As employers, understanding the impact of student loan default on the well-being of your workforce is crucial.

employer learning student loan default

How Student Loan Default Can Affect Employee Performance

Student loan default can have a profound impact on the overall well-being and performance of employees. Financial stress from loan default can lead to several problem including everything from decreased job satisfaction, heightened anxiety levels, to a general decline in mental health.

Employees grappling with the repercussions of default may find it challenging to concentrate on their tasks. This can diminish their productivity and overall work quality leading to potential issues in efficiency. Furthermore, persistent financial strain can create a ripple effect, influencing job performance, teamwork, and even employee morale.

Employers who recognize the connection between financial well-being and job performance can effectively address these challenges head-on. Effective strategies can foster a supportive workplace culture that values and uplifts its employees.

How Employers Can Help.

In response to the growing need to address financial stress caused by student loan default, many employers have begun to offer student loan assistance programs. These programs alleviate the burden of student loan debt and support employees in managing financial obligations.

Currently, 21% of Employers offer a student loan repayment benefit and another 31% are on track to do so. Here are some key aspects of student loan assistance programs offered by progressive employers:

  • Student Loan Repayment Program (SLRP) & : This benefit has consistently ranked as one of the top benefits requested by Gen Z and Millennial employees. Assistance can take on a few different forms from cost-friendly to a more significant budget offering. A SLRP offers as a monthly contribution paid directly to the employee's student loan account, a matching program, or a flexible matching program.
  • Flexible Matching Student Loan Repayment Program: A flexible matching program is an innovative SLRP sitting next to the company’s retirement plan and uses “un-allocated” retirement match dollars for a more budget friendly program. Currently, every year more than $24 Billion in employer match money is used by employees. A Flexible matching program can enable employees to use those dollars for financial needs in addition to their retirement account.
  • TAX FREE Benefit under the CARES ACT. Through the end of 2025, Employers can offer a SLRP TAX FREE up to $5,250 per employee per year. In addition to reaping a significant tax benefit, offering a SLRP shows employees how their employer cares about, and will support, their financial well-being.
  • Personal Student Loan Advice: Offering guidance, and even enrollment assistance, in the Department of Education’s Income Driven Repayment Programs & PSLF is a tremendous offering for employees. What is more, firms like Silver Lion Student Loan Advisors offers free monthly webinars and free student loan reviews. With student loan servicers being fined by the DOE for not providing adequate, or honest, guidance offering your employees a trusted resource can be the benefit of a lifetime.
  • Fresh Start Program: In fact, the DOE has created a limited time program intended to help Federal loan borrowers get out of default and back to good standing. Student loan advisors can walk your employees through the benefits and enrollment process.
  • Refinancing Support (Private Student Loans): Employers may partner with financial institutions to provide employees with refinancing options. This can lead to lower interest rates and more manageable monthly payments.
  • Help Prevent Student Loan Default: Providing your employees with financial wellness & budgeting education is beneficial for overall well-being and can keep your employees on track for the future.

Preventing Student Loan Default for Your Employees

These student loan assistance programs demonstrate a proactive approach by employers to support their employees. Offering a range of assistance options can make a meaningful difference in the financial lives of their workforce.

Navigating the challenges of student loan default requires a proactive and supportive approach from employers. Whether it's through a SLRP, expert advice on student loans, or exploring other financial assistance options, employers can play a crucial role in alleviating the burden on their employees.

Looking to try flexible matching programs or address student loan concerns? Reach out to financial experts who specialize in these areas. Take the next step in supporting your employees' financial well-being. Explore how personalized strategies can make a meaningful difference. Connect with us now.