Supreme Court Strikes Biden's Student Loan Forgiveness Plan

By Kathryn Mayer and Beth Mirza June 30, 2023

The Supreme Court ruled 6-3 on June 30 to strike down the Biden administration's student loan forgiveness plan—a decision that could put a spotlight on student loan benefits offered by employers.

The Biden administration announced last year that the federal government would repay up to $10,000 in student loans for borrowers who earned less than $125,000 during the pandemic and up to $20,000 for those who received Pell Grants. But two cases--Department of Education v. Brown and Biden v. Nebraska--contested his plan, resulting in the High Court hearing the issue in February.

The decision means that borrowers will need to resume loan payments soon. All borrowers with outstanding federal student-loan balances will see interest on those loans resume as of Sept. 1, according to the Education Department. Payments will be due starting in October.

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Industry experts contend that the ruling highlights a need for additional support in tackling student loan debt and could spur a rise in student loan benefits in particular.

"To recruit and retain a first-class workforce, employers need the flexibility to offer benefit packages that fit the needs of their employees. Educational assistance is one such tool," according to a statement from SHRM.

"Now that the Supreme Court has ruled in the case of Biden v. Nebraska and Department of Education v. Brown, we call on Congress and state legislatures to pass policies that support employees and employers. This includes raising the limits on tax-free, employer-provided education benefits; permanently allowing employers to provide tax-free student debt relief to their workers; and making it easier to implement these benefit programs." 

SHRM also called on employers to support their workers navigating student debt challenges with benefits such as financial planning support and education assistance. 

"The nationwide conversation that this news has sparked is reigniting the push for workplace programs that help employees navigate their student loans, which are a massive financial burden on countless individuals," Edward Gottfried, director of product at Betterment at Work, a New York City-based financial wellness provider, told SHRM Online in February. "This can take a few different forms, from educational resources and repayment tools that make it easy for workers to understand their debt and how to prioritize paying it down over specific time horizons to benefits such as matching contribution programs or direct financial assistance."

Student loan repayment is a popular perk—employees overwhelmingly say they want the benefit—but the offering is still a fairly rare one among employers. According to SHRM's 2023 Benefits Survey, released June 12, just 8 percent of employers offer a student loan benefit.

Companies including Aetna, Estée Lauder and Fidelity Investments offer the benefit, arguing that not only is it helping tackle a major component of financial stress for their employees, but it's an attraction and retention tool as well. Sports apparel company Adidas this month announced it is offering its full-time employees $100 a month—totaling $1,200 a year—toward their student loan debt.

A 2022 survey conducted by Betterment at Work found 57 percent of employees think their employers should play a role in helping them pay off their student debt—which, for the average borrower, totals more than $37,000, according to the Education Data Initiative.

The Supreme Court decision also comes as the pandemic pause on student loan payments, which has gone on for three years as a result of the pandemic, nears its end this summer. Interest on the loans will begin accruing again on Sept. 1, and borrowers will have to begin making payments in October. President Donald Trump put the payment pause in place in March 2020 as an emergency pandemic measure.

"The combination of the continued moratorium on student loan repayments and the proposed loan forgiveness plan have created a false sense of security for employers, who have delayed supporting their employees who have student loan debt," Gottfried said.



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