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Sunday, June 23, 2024

Navigating the challenging new landscape of student loans


The resumption of student loan payments could upend employees’ financial well-being — but employers can help ease the burden.

The pause on federal student loan payments ended in October and borrowers are required to resume monthly repayments. For many, those payments will exceed $1,000, according to an Empower survey of 2,210 Americans conducted in June 2023.

The shift comes at a particularly difficult economic moment

Consumers are straining under a set of challenging economic pressures, including inflation and rising credit card debt. Americans owe more than $1.6 trillion in federal student debt, and the average federal student debt loan balance is more than $37,000. At any given time, 15% of student loans are in default.1

While investing in higher education is tied to higher lifetime earning potential, carrying student loan debt can create challenges for financial wellness, including reduced savings, delaying having children, and stress.


The road to repayment may be daunting, but both groups can take actions to reduce the financial strain along the way.

For borrowers: Finding the best options for debt forgiveness, repayment, and refinancing can reduce the cost of debt and provide an opportunity to make progress toward financial freedom.

For employers: Helping employees tackle debt reduction has the potential to bring a wealth of benefits, including increased employee engagement, reduced absenteeism, improved employee health, and — perhaps most importantly — improved employee recruitment and retention.

The state of student loan debt

  • Most borrowers must begin payments in October 2023.
  • There’s a 12-month “on-ramp period” during which missed or late payments won’t result in collection actions.
  • More than 800,000 borrowers will have their debt forgiven, thanks to adjustments made to federal income-driven repayment programs.3 However, this relief will be limited to certain borrowers with at least 20 years in a qualifying repayment plan.
  • Other borrowers will benefit from another new initiative, the federal government’s SAVE plan, which reduces monthly payments to a maximum of 10% of a participant’s income over 225% of the federal poverty line. SAVE replaces the REPAYE income-driven repayment plan, which protected only income up to 150% of the federal poverty line.

Impact of resuming student loan payments

Empower research shows that workers are preparing to make significant lifestyle changes in response to resumed loan payments. More than half of workers will likely cut back on discretionary spending to afford the payments. Slightly fewer will likely search for higher-paying jobs or take on second jobs, while many will delay buying homes and/or cancel vacations.

Employee ranking of workplace benefits

Empower research shows that workers rank health and retirement matching benefits as the most important benefits by far. A smaller subset of workers ranks student loan repayment match and refinancing assistance as one of their top two choices. However, among employees with student loans, the importance of student loan repayment matching benefits increases significantly and ranks just behind retirement account matching.

How employers can help

  1. Education: Employers can play a key role by working with benefits providers to develop communication materials that explain the new rules and repayment options, and provide updates regarding important milestones, including application deadlines and the resumption of payments.
  2. Debt planning: Employers can help employees navigate the options available to them, which may include forgiveness, repayment options, refinancing debt, and any employer-sponsored student loan repayment benefits.
  3. Financial planning: Professional financial advice and comprehensive education can help employees make the best of the new situation through prioritized debt reduction, budgeting, saving, and investing.
  4. Repayment: For borrowers still facing debt, employer contributions to debt repayment may be a powerful recruiting and retention tool. Associated tax benefits provide an additional incentive for employers to contribute. Employers can make tax-free contributions for employee student loans up to $5,250 annually through December 31, 2025.

Download the white paper to learn more





Empower contracted Morning Consult to conduct a survey of 2,210 adults. The poll was conducted online June 28–30, 2023, and the data was weighted to approximate a target sample of adults based on gender, age, race, educational attainment, and region. Results from the full survey have a margin of error of plus or minus two percentage points.

1 Education Data Initiative, “Student Loan Debt Statistics,” July 2023.

2 Empower, 2023 EAFJ Consumer Survey, August 2023.

3 New York Times, “Do You Qualify for Biden’s $39 Billion Student Debt Cancellation?” July 2023.