Employers Recognize Need For Solutions To Tackle Employee Student Debt After COVID-19
It’s no secret that America is facing a student debt crisis. An estimated 44.7 million Americans have past due student loan debts totaling $ 1.54 trillion, in March 2020.
The global pandemic has made this crisis even more difficult, especially for healthcare professionals.
A new investigation shows that over 90 percent of healthcare workers expect to have trouble paying off their student loans in six months. As such, there has never been a more important time to support employees in managing student debt, from deferred payments to loan cancellation.
Here at Boston Medical Center, New England’s largest safety net hospital and trauma and emergency services center, we’ve made student debt support a priority in our recent offerings. advantages. In keeping with what is happening nationally, many of our clinical and administrative team members are burdened with the high cost of student loans, which can be a considerable distraction on top of the difficult roles in our busy hospital. For example, our 750 medical residents will probably graduate from their medical training with an average debt of $ 161,772.
Fortunately, one solution for employees who work in a qualifying public service organization may be the Public Service Loan Discount (PSLF). This program, established under the Cost Reduction and Access to Colleges Act, 2007, allows Direct Loan (DL) borrowers to have the remainder of their balance written off, if they meet certain criteria.
While the PSLF is an important program designed to help people who serve others, borrowers have reported difficulty navigating the program successfully. In fact, as of December 31, 2019, 76% of requests processed were adjudicated ineligible due to non-compliance with program requirements, and 22% for missing or incomplete information.
To support our employees through this complex process, we recently worked with our pension and financial wellness provider, as well as a social impact tech startup, to implement a new student debt solution. This solution helps our employees understand their options and navigate the complexity of PSLF and income-based repayment plans.
This approach has yielded significant results. For example, our eligible employees cut their monthly payments in half and save an average of $ 1,800 per year in student debt repayments. Additionally, those who signed up for the service should see an expected average forgiveness of over $ 65,000. These substantial savings have allowed our employees to redirect hard-earned money to other personal and family financial goals.
We also know that student loan debt is a heavy burden on the mental and physical health of employees. According to a one-year study by TIAA and MIT AgeLab, 84% of American adults who currently make student loan payments report a negative impact on the amount they can save for retirement. Additionally, borrowers with larger initial loan amounts report greater delays in lending at traditional stages such as saving for retirement, starting a family, or buying a home.
All of us, including policy makers, employers, tech startups, benefit managers, and pension providers, play an important role in identifying and creating solutions to help individuals manage student debt. . We are able to significantly support the improvement of the overall financial well-being of employees and the long-term financial security of current and prospective employees. After all, education is one of the smartest investments anyone can make – the payoff can be even smarter.
Lisa Kelly-Croswell is SVP and CHRO at Boston Medical Center, who worked with retirement and financial wellness provider TIAA as well as social impact tech startup Savi to implement a new student debt solution.