Policy Spotlight: Employers Offering Student Loan Assistance

Massachusetts is considering a tax incentive for businesses that provide student debt relief, a growing national trend as employers seek to boost productivity, attract and retain talent.

A new bill in Massachusetts would create a “tax exemption for Massachusetts employers that assist their employees with paying off student loan debt” with the annual exemption capped at $2,000 per employee.

It’s the latest example of the growing national realization that student loan debt is a threat to the financial security of millions of employees and a drag on business productivity.

According to The Society for Human Resource Management, employers recognize the emotional toll that employee student debt can cause and see its effects on employees’ mental health, work performance, and the business’ bottom line.

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.

We see the impacts of this crisis of student debt in our work everyday, which disproportionately hinder our Black clients who are most likely to hold student debt and larger balances.

But we also see growing recognition among business leaders, policymakers, and philanthropists of the opportunity costs of student debt and of what it costs employees in terms of economic mobility and financial security.

A fall 2020 AIG Retirement Services survey of public-sector employees who are repaying federal student loans found that many workers “would otherwise use money spent on monthly student loan payments for other financial responsibilities, such as contributing to retirement savings and investments (47 percent) or adding to their emergency savings fund (43 percent).”

Employees want to invest in their own financial futures. Leading businesses and smart policies help them.