I Want To Provide Student Loan Repayment Assistance To My Employees

Addressing Suzanne Lucas’ article on the student loan repayment benefit

One of my main objectives in writing about the employer student loan repayment assistance program has been to relay with urgency our shared responsibility for finding solutions to the $1.5 trillion student loan debt crisis.  We are in this together.  Employers helping graduates repay their student loan debt has a ring of social justice to it since, after all, these students are incurring debt for the primary reason of entering the jobs market.

A recent article by Suzanne Lucas, who goes by the Twitter handle @RealEvilHRLady, for Inc.com entitled Why Student Loan Repayment Is Not the Benefit You Should Offer in 2019 serves up a few points that I believe are misguided and deserve to be addressed.  My bias as a writer for a company that specializes in loan repayment assistance benefits must be acknowledged.  Though I am an employee, I am also a former student with my own personal mountain of loan debt.

The truth is that this program fascinates me with its possibilities for addressing a critical social issue while at the same time benefitting both the employee and the employer.  Is the program for everyone?  Of course not, but that’s beside the point.  That’s like nixing the cheese at a burger bar just because you are lactose intolerant.  Well, that’s all fine and dandy, but some people actually like cheese.  Some people need cheese.

Let’s address Lucas’ concerns.

#1. Student loans are voluntary

Lucas comes out the gate swinging by stating that student loans are voluntary, and therefore, debtors should have no expectations of assistance from employers in the way of loan repayment benefits.  However, this assumption that people take out student loans as the result of poor decision-making and not out of necessity is, at best, an incomplete picture of the national dilemma.

The American student loan crisis has been brewing since the mid to late 1980s when reports started emerging that federal student loan debt had taken on what was at the time to be massive proportions of $10 billion.  By 1986, over a quarter of student borrowers owed over $10,000 in loan debt.  Taking inflation into account, this is equivalent to over $21,000 today.  By the 1990s, student debt had become a pervasive aspect of the national dialogue.

The student loan crisis has been on the radar for years.  Shocking new statistics have been coming out year after year.  People have lamented their debt woes since the beginning practically, and yet, the rate at which people take out loans to pay for their education has not slowed.  Why?  There is no single reason for this phenomenon.  We can partially thank rising tuition costs and reduced state spending for all of this.

Whatever the causes, I think it is fair to say that student loans certainly don’t feel optional to borrowers, who are obviously willing to partake of a system that they know can have pretty drastic ramifications for them later down the road.  In that sense, student loans are not voluntary – at least not for the students who have no other means of funding their education.

Nonetheless, Lucas asserts that “if you’ve chosen massive debt for a degree that does not have a high ROI, well, that’s a choice you’ve made.”  I would assert the opposite.  These choices have been made for us by a complex socio-economic system that subjugates basic human dignity for profitability.

#2. You can pay student loans with your paycheck

The average monthly student loan payment for borrowers ages 20 to 30 is $351.  On a micro-level, the student loan debt crisis is getting worse and worse, meaning that the average debt load that individuals carry is increasing. Student loans have an 11.2% default rate, and let me tell you something: they’re not defaulting out of choice.

They are defaulting because they can’t pay them.  They are defaulting because the cost of living is going up while wage growth is being wiped out by inflation.  They are defaulting because their paycheck is going towards paying the rent and other bills.  It is certainly nice that some people can take for granted the discretionary income that their social and economic status affords them, but for a large number of Americans who struggle day to day to make ends meet, this is simply not reality.

#3. Student loan repayment benefits have a disparate impact

False.  Student loan debt certainly doesn’t have a disparate impact on our society, so why on earth would we assume that a measure that effectively helps address the issue would only have a disparate impact?  On the contrary, the loan repayment benefit has a pervasive impact in the workplace and, potentially, in society.

Student loan debt is not just a young people issue.  In 2017, nearly 2.8 million people age 60 and over were still paying off student loan debt.  The total loan balance for this age group is $66.7 billion.  That’s not to mention the compound effect that student loan debt has on not just the debtor, but also their family members and friends.

One of the key takeaways from the student loan repayment assistance program is that it can be structured to address any number of specific issues, including the impact that loan debt has on families.  Therefore, a company can structure their benefits program to potentially extend to employees who don’t have student loan debt themselves but who have family members who do.  This is not a disparate impact at all.  Certainly, this benefit is not right for every single employee within an organization, but the effect of the benefit is far more pervasive than Lucas would have you believe.

#4. Tax benefits aren’t that great

Lucas has a point here.  The tax benefits aren’t stellar.  Not now.  But, things may be changing.  I have written about the IRS Private Letter Ruling that went into effect a few months ago.  That could have some interesting implications as to how the benefit can be structured in the meantime to get a better tax treatment.  There are also bills on the table in Congress that would change the law on the tax status of this benefit.  But, for now, we can only focus on the positive aspects of this benefit, and there are many.

Why you need to get on board with this movement 

I think Lucas and I probably agree that something needs to be done about the student loan debt crisis.  I agree with her assertion that everyone should be paid fairly.  But, the fact is that this benefit actually, truly helps people.  It makes a difference in people’s lives.  Incidentally, it also does wonders for a company’s recruiting and talent retention strategies.

So, what is the issue here?  I think people just need to learn more about the benefit and how it can work within a particular company.  There is a malleability to the benefit that allows it to be custom-tailored to address specific issues, including recruitment, retention, and employee engagement.  As further political headway is made, this benefit will only become more common in a society that desperately needs solutions like this.

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