How HR Teams Can Prepare for the Student Loan Payment Restart

​When Dwight Holton learned that his employees had more than $7.5 million in student loan debt, he was surprised. Holton, CEO of crisis support line provider Lines for Life, decided to survey the 250-worker Portland, Ore.-based nonprofit to get a better sense of how America's crushing $1.77 trillion student loan debt crisis was impacting workers. A hundred employees responded, reporting an average payment of $600 per month. 

Because Lines for Life provides certain services, its employees are eligible for the Public Service Loan Forgiveness (PSLF) program through the federal government. PSLF forgives the remaining balance loans of employees of some nonprofit organizations, the government and other eligible employers. 

When Holton discovered his employees were struggling to find meaningful support to answer questions about their loans, he enlisted the help of the Institute of Student Loan Advisors to help educate his HR team and employees on how to apply for PSLF. The Institute of Student Loan Advisors is a nonprofit based in Massachusetts that provides student loan resources and advice to borrowers. 

"When I started talking to my employees, I learned it [student loan debt] was something that was of absolute paramount importance. It's a mental health drag," Dalton said. "Talk to them to find out where their needs are and what you can do to help plug in." 

In October, millions of employees will once again have to begin repaying their student loans after a nearly three-year payment pause due to the COVID-19 pandemic. Call times at loan servicers are expected to skyrocket as borrowers seek help navigating a brand-new landscape for student loan repayment. The Biden administration has launched initiatives to lessen the burden of student loans on borrowers, including the Saving on a Valuable Education (SAVE) plan, an income-driven repayment plan that calculates payments based on a borrower's income and family size. 

It's important for HR teams to be prepared with basic information about student loan repayment, said Betsy Mayotte, president and founder of the Institute of Student Loan Advisors. They should also know where to direct employees if they have questions about their loans. 

"Employers can provide meaningful support to their employees without it having to cost a lot of money—or any money," Mayotte said. "It can be as simple as knowing a good place to go for information, even if it's just the Department of Education's website." 

Educating HR Teams

Organizations, including SHRM, have joined a campaign launched by the U.S. Department of Education to educate people about the SAVE plan and other student loan resources. Some of the resources that SHRM is sharing with its HR members include:

• Information from Federal Student Aid for borrowers who were in repayment before and are going to resume payments.
• Information from Federal Student Aid for borrowers who haven't made a payment before.
• Information from Federal Student Aid about the SAVE plan.
• Week of Action Toolkit from Save on Student Debt.

Employers may have to get involved in the process if their employees are applying for programs like PSLF, said Jeni Burckart, vice president of coaching at Tuition.io, a Santa Monica, Calif.-based education assistance benefits provider. The Biden administration created a one-year waiver that expanded eligibility for the program, and many borrowers are now eligible who weren't before. 

"They've really improved the ability of people in public service work to qualify for public service loan forgiveness," Burckart said. 

But as loan payments restart, employees will be looking for answers to even more basic questions. HR teams can help fill in some of the gaps. 

Burckart said she sees many employees who may not know they are eligible for forgiveness or who have been paying their loans incorrectly for a long time. By educating HR staff, companies can help employees pay off their loans more efficiently. 

"It's really important that they know how to maximize that loan forgiveness under all of the changes that have happened," Burckart said. "We just had somebody in Atlanta [who works for] a large health system with over $350,000 forgiven." 

Expect Challenges with Servicers 

Many student loan servicers cut staff or merged during the payment pause to save money, experts said. The restart became official after the debt ceiling bill was signed in June, and servicers have had to navigate expanded forgiveness and repayment programs with a reduced staff. 

This has led to more borrowers receiving incorrect information from their servicers or not hearing back at all, Burckart said. 

"We do hundreds of calls a month with borrowers, and we are definitely seeing a huge uptick of borrowers not being able to get information back from the servicer," she said.

Consider Student Loan Repayment Benefits 

Employers who want to go a step further could consider student loan repayment benefits. These benefits can help ease financial stress and can be good for the bottom line, Mayotte said. 

"Especially after the repayment restarting and the economy being in a very different place—things like rent and lettuce cost a lot more than they did a few years ago—there's a monetary benefit to an employer that offers some kind of student loan support to employees," she said. 

Employers can also work with an education benefits provider to access financial or student loan advisors. These advisors, who often come from third-party vendors, can help borrowers improve their student loan repayment experience by providing advice on how to pay the least amount of money over time. 

But be wary of companies that encourage workers to refinance, Mayotte added. The best options for loan forgiveness are provided to borrowers whose loans are held by the federal government. 

All in all, employers that look to help employees with their student loan debt will benefit.

"It is causing employees financial stress; it is what will drive them across the street for an extra dollar an hour to find similar work for higher pay," Mayotte said. "Student loan repayments are a monthly financial pressure. It's constant; it doesn't stop. If you offer a benefit that helps them address that stress, they think of you every single month." 

Caroline Hroncich is a freelance writer based in New York City.