Financial Wellness & Productivity: Employer-provided student loan assistance supports equity

Black or African American identifying TrustPlus clients are more likely to hold student debt and larger balances

February is Black History Month, a time for reflection, celebration, and action. Leading companies and nonprofits understand racism inside and outside of the workplace hurts employees, productivity, and the bottom line, it “impoverishes the whole economy.”

As organizations committed to equity and excellence look for ways to create a more inclusive workplace and strengthen their workforce, there is a growing realization that offering student loan assistance can be a critical part of the solution.

Employers offering repayment assistance doubled to 8 percent in 2020, according to the Society for Human Resource Management’s annual employee benefits survey, demonstrating this growing realization as well as the fact that a huge opportunity still awaits farsighted organizations.

Providing student loan assistance to employees benefits all workers, and it supports equity because Black or African American identifying workers are most likely to hold student debt and have higher balances, an inequity we see among our own clients which mirrors national data. 56% of Black or African American clients we’ve served since 2018 have student loans compared to 37% of Latino/Latina/Latinx clients and 39% of White clients. Even between clients with the same level of education, our Black or African American clients are most likely to have student loan debt.

Increasingly, employers recognize the emotional toll that employee student debt can cause and see its effects on employees’ mental health and work performance. More broadly among business, philanthropy, and public leaders there’s a “growing belief that student loan debt represents a financial crisis in the same way as concerns about our country’s retirement savings,” says Rob Scheinerman, CEO at AIG Retirement Services.

Just how bad is the crisis? Outstanding student loan debt nationwide exceeds $1.7 trillion, more than credit card or auto debt, representing a 100% jump since 2010. About one in four borrowers or 10 million people are now in delinquency or default. It’s such a widespread problem for employees and employers that 57% of Americans now say the president should make student loan forgiveness a priority.

In this competitive labor market where employers are looking for ways to attract and retain talent, offering student loan repayment assistance is one powerful way to differentiate yourself, demonstrate leadership, support equity, and strengthen your organization.