Now that federal student loan payments have restarted after a nearly three-year pause, HR teams can play a key role in supporting employees through this transition. With over 45 million Americans holding $1.77 trillion in student debt, many workers face renewed financial burdens from monthly payments.
As employees tackle the October payment resumption, HR staff should be equipped to assist them. This guidance can ease financial stress and boost retention.
Explain New Repayment Plan Options
A critical first step is educating employees about recent changes to income-driven repayment plans. The Biden administration’s Saving on a Valuable Education (SAVE) plan lets borrowers cap payments at 5% of discretionary income, down from 10% previously. The plan also forgives balances after 10 years of payments rather than 20.
Federal Student Aid data shows nearly 8 million borrowers could benefit from enrolling in the SAVE plan. HR teams should be well-versed in details so they can accurately convey eligibility and the application process.
Assist with Loan Forgiveness Applications
HR staff should also understand loan forgiveness programs, especially Public Service Loan Forgiveness (PSLF). The sunset date for the temporary waiver offered under the program was October 31, 2022. The program itself, however, is still active and can be applied for by those who qualify.
Employers should ensure HR can guide workers through the required employment certification and documentation to apply. The Department of Education’s website and Federal Student Aid hotline offer unbiased guidance. Nonprofits like the Institute of Student Loan Advisors also provide free advice.
Consider Offering Repayment Benefits
While optional, some employers provide student loan repayment assistance. Contributing monthly payments can significantly speed up payoff timelines.
According to the Society for Human Resource Management, fifteen percent of U.S. companies offered student loan payment benefits in 2021.
In any case, HR can help identify optimal repayment strategies to pay off loans quickly and affordably, easing financial burdens.
Have Patience as Servicers Struggle
HR staff will need empathy as servicers handle questions from millions of borrowers. Wait times over one hour are common.
Incorrect loan data is also frequently reported as servicers update long-dormant accounts. HR should advise persistence until employees get clear answers.
Guiding staff through the repayment restart strengthens company culture and support. By providing key information and resources, HR enables employees to confidently manage student loans.
For more employee benefits resources and industry insights, contact INSURICA today.
Copyright © 2023 Smarts Publishing. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.