Emergency federal student loan forbearance — originally enacted by the CARES Act in March 2020 — is set to expire on May 1, 2022. Between the majority of the 43.2 million borrowers returning to steep monthly payments and Americans ranking money as their top stressor, HR leaders need to brace for the impact the end of the student loan payment freeze will have on employees’ financial and emotional wellness.
Planning ahead is borrowers’ best defense against feeling strained in May — and as an employee benefits professional, you can give your workforce the tools they need to feel ready.
Here’s our checklist for helping employees prepare for the end of federal student loan payment suspension:
✅ Remind employees to mark their calendars for May 1
After more than two years of payment-free bliss, some borrowers are bound to forget to make their first payment. The consequences of missing a student loan payment can be costly and detrimental to the borrower’s credit score, so it’s better to be safe than sorry.
✅ Encourage employees to review their household budgets
Student loan payments are no joke: the average payment is $393, with some borrowers paying northward of $2,000 each month. Employees who don’t account for this major expense in their household budgets are more likely to find themselves unable to foot the bill or feeling overwhelmed when payments resume in winter.
✅ Help employees balance other financial priorities
The return of federal student loan payments could force borrowers to delay other financial goals, such as making retirement contributions or building an emergency fund. Review how your benefits package could better support employees’ long-term financial wellness — especially considering that legislation to help employees with student debt while also saving for retirement is likely to pass in the next year.
✅ Share resources for lowering monthly student loan payments
The end of student loan forbearance is the ideal time for employees to review their paydown strategy. Borrowers who are struggling to afford their payments — or who just want to pay less each month — should check their eligibility for a federal income-driven repayment plan, which caps payments at a percentage of the borrower’s discretionary income.
Want to give employees a jump start? FutureFuel.io can help borrowers find, compare, and enroll in alternative repayment plans in a matter of minutes.
✅ Don’t leave out private student loan borrowers
The payment freeze has only applied to federal student loans — and many private student loan borrowers have received little or no relief during the pandemic. As you help employees to resume federal student loan payments, don’t overlook opportunities to support employees with private loans too.
For example, private student loan borrowers are often better candidates for options like refinancing, which can lower monthly payments and interest rates — and FutureFuel.io can help eligible employees compare prequalified refinancing options for free.
✅ Consider what more you can do to help
Student debt solutions are one of today’s most in-demand employee benefits — and thanks to new legislation, employers who offer student loan repayment assistance can cash in on tax incentives. By introducing student loan repayment employee benefits, employers can make a bigger impact — and reap more rewards — than ever before.
Schedule a demo to learn more about how tax-incentivized student loan benefits from FutureFuel.io can help your workforce thrive.