COVID-19 Update

In light of the global pandemic, the federal government’s Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed in late March, has several provisions related to student loan debt that employers and employees should be aware of including:

1 – Payments on student loans will not be required through 9/30/2020. Nonpayment during this time will not yield any negative repercussions for the payer (such as a credit score hit), and interest will not accrue during the six months. This exception applies to direct and federal family education loans, but not private loans. In addition, borrowers who can afford to continue making minimum payments (or make additional payments), will have all of these payments apply toward principal during this period, allowing them to further benefit by paying off their student debt more quickly.

2 – If an employer would like to help an employee pay down their student loan debt as an added benefit during this difficult time, the employer can make a tax-free payment of up to $5,250 per employee during 2020. Prior to the CARES Act, employer payments were fully taxable to employees. Employers are hopeful that additional legislation will make these tax changes permanent.

In 2018, Americans held a whopping $1.5 trillion in student loan debt, beating both the national auto and credit card debt rates. This number has grown exponentially in recent years, having an impact on all employees but arguably hitting the millennial generation hardest. As a result, employees are deferring home purchases and retirement savings due to their student loan obligations. In turn, this creates a challenge for employers working to recruit these employees, who are experiencing financial challenges and not at optimal productivity or engagement.

Employers across the country are recognizing this crisis, and implementing solutions to mitigate its effects for employees. However, nothing is simple. In considering a student debt relief benefit, organizations need to think about:

  1. Strategic goal(s)

  2. Financial wellness

  3. Funding and taxability

  4. Administrative complexity

  5. Employee demographics

In this article, we will elaborate on these factors and outline the pros and cons of several established student debt benefit programs. We will also provide our perspective on the future of the market – is this a short-term trend or something that is here to stay? Click here to read the full article.

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Teri Weber

Teri Weber

Partner at Spring Consulting Group, LLC
Teri Weber, ACI is a Senior Vice President with Spring Consulting Group. She has over 10 years of experience in health and welfare plan strategy, design, pricing, and implementation. She also works with absence management programs, including disability, family medical leave and leave of absence tracking. Her areas of expertise have allowed her to work with diverse employers and vendors to streamline processes and programs to meet the needs of insurers, administrators, employers and employees. Teri is on the Board for the New England Employee Benefits Council (NEEBC) and recently served as lead editor for the Disability Management Employer Coalition’s (DMEC) Return to Work Program Manual. Prior to joining Spring, Teri worked with Watson Wyatt, Buck Consultants and AON Consulting. In addition she was an Account Manager with Health Direct, Inc. Teri earned a BS at the University of Connecticut and a MBA at the University of Massachusetts. She holds an ACI designation and is a licensed broker in the states of MA and CT.