Approximately 42 million Americans have
In March 2020, Congress passed the CARES Act, not only pausing payments but setting interest rates on student loans to 0% and halting collections on defaulted student loans. The Department of Education estimates that this policy saved borrowers as much as $4.8 billion per month of accrued interest.
But as this period of relief ends, many workers — especially those in traditionally lower-paying jobs in the not-for-profit and public sectors — are looking to employers for assistance. According to financial services organization TIAA, 60% of those surveyed felt their employer is responsible for helping them with student loan debt.
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“Our survey tells us that almost 95% of not-for-profit and public sector employees will experience at least some difficulty keeping up with the continuation of student loan payments,” says Snezana Zlatar, senior managing director and head of financial wellness, advice and innovation at TIAA. “People are feeling frustrated — they're feeling fearful, hopeless, angry and even ashamed of this burden they carry.”
TIAA found that 85% of respondents reported loan debt as a source of stress, and nearly half reported that they had to make a major life change, such as holding off on buying a home, due to continuation of loan payments. Because of this financial hardship, student debt impacts employees’ relationships to their personal and professional lives, Zlatar explains.
“A third of respondents told us that they are considering switching careers, moving from a not-for-profit or public sector job to a higher paying job,” she says. “It can be difficult or impossible to pay their student debt without the relief from the CARES Act in the past.”
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Zlatar views the end of the CARES Act as an opportunity for employers to step up and support their workforce. One effective way to do this is to help employees apply for loan forgiveness. TIAA has partnered with social impact tech startup, Savi, to assist not-for-profit and public sector employees navigate their student loans, with a focus on taking advantage of the Public Service Loan Forgiveness program. Their services will be offered as an employer-provided voluntary benefit.
However, the PSLF program is notoriously challenging to apply for, with 98% of applicants rejected for not meeting requirements or having missing information. Savi can help employees figure out if they’re eligible for the program, as well as ensure applicants are in compliance with PSLF requirements and meet deadlines.
“By taking advantage of the Public Service Loan Forgiveness Program, individuals can then redirect their savings towards major goals in their lives, like buying a home or retirement,” Zlatar says. “It is really important for employers and employees to explore this avenue.”
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TIAA and Savi claimed to have already secured $200 million in loan forgiveness — that’s over $50,000 per applicant after successful completion of the PSLF program. Still, this program is only applicable to those employed by a U.S. federal, state, local, or tribal government or not-for-profit organization. In addition, they must work full time, have an income-driven repayment plan, and make at least 120 consecutive loan payments.
Zlatar also recommends that employers consider contributing to employees’ student loans while connecting them to educational sources on student loan management.
“We would like to encourage employers to take the opportunity to help their employees in innovative ways,” Zlatar says. “And student loan assistance will be a tremendous benefit to employees and employers.”
