How Resuming Federal Student Loan Payments Could Affect Your Employees
Federal student loan payments paused in March 2020, but they resume January 2022. While millions of borrowers were able to defer payments temporarily, no broader student loan forgiveness plan has come to fruition. As this payment pause ends, employers must prepare for the challenges employees face with resumed payments. Below are some of the effects the repayment may have on both employees and employers, and how a financial workplace wellness program can help.
Effects on Employees and Employers
Employee Health Issues
The most prominent effect of resuming student loan payments is an increase in stress for many workers. Like other forms of debt, student loans can take a substantial mental toll on debtors. GoodTherapy states stress can even manifest as physical symptoms. For example, muscle soreness, insomnia, and stomach pains are common physical effects of chronic stress. Additionally, those struggling with stress often have difficulty focusing and may experience depression or anxiety.
Delayed Life Decisions
Many employees who must resume repaying their student debts will once again have to cope with financial instability. According to Nitro, the average student loan borrower owes about $37,000. In other words, they pay nearly $400 each month toward student debt. The financial stress of these loans often forces borrowers to delay major life decisions. SoFi states modern workers frequently delay marriage, home buying, and family planning while trying to pay down debt.
Decreased Workplace Productivity
The stress and hardship that come with student loan debt aren’t confined to employees’ personal lives. Workers burdened with student debt are distracted and generally have poorer job performance than those who are more financially stable. Insight from Ameritas shows debt-related stress also causes workers to take more sick days. As a result, employers may experience reduced productivity and increased absenteeism.
Increased Turnover
Another likely effect of resuming payments is higher levels of turnover. Young workers with high student loan debts are known to change jobs every few years. Often, they are searching for higher salaries or student loan repayment programs from new employers. In fact, studies show student loan repayment programs actively improve employee retention. Harvard Business Review states 86% of young workers are willing to commit to five years with an employer who helps them pay off student debt. With a tightening labor market, businesses should consider student loan assistance and financial literacy programs for their employees.
How Can a Financial Workplace Wellness Program Help?
Financial workplace wellness programs can help employees cope with the challenges of resuming student loan payments. These programs are designed to help employees make the most of their salaries and benefits. They do so by focusing on education and financial planning. Additionally, financial wellness programs help employees understand what further resources are available and how to take advantage of them.
Offering a financial wellness program as an employee benefit is an excellent way to support your employees’ goals. Financial wellness provides education for paying off debt, building credit, saving for retirement, and more. Financial education helps to reduce stress, which improves employee health, happiness, and productivity.
Find out how 101 Financial’s Workplace Wellness program can help your employees navigate the end of the student loan repayment pause.