What the Supreme Court's ruling on student loan forgiveness means for employees

As anxious borrowers react to the Supreme Court's ruling to stop student loan forgiveness, employees are once again faced with the financial burden of college debt. But with widespread financial stress already taking its toll on the workforce, will employees be able to manage yet another expense?  

The Supreme Court has ruled the Biden administration cannot forgive more than $400 billion in student loan debt, a plan that was introduced last August and would have forgiven up to $20,000 in loan payments for those making less than $125,000 per year. Since Biden announced the plan, six states and a conservative advocacy group have sued, with both cases eventually reaching the Supreme Court.  

With loan forgiveness now blocked, employees are also facing the end of COVID-era payment pauses — student loan repayments will resume October 1 of this year, due to the end of the pandemic federal emergency. While Biden extended these pauses nine times already, he no longer has the authority to extend additional federal aid. 

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For borrowers, this is unwelcome news. Currently, nearly 17% of the workforce has student loan debt, according to the Employee Benefit Research Institute. The average borrower owes between $20,000-$24,000, according to the Federal Reserve, totalling a collective $1.78 trillion in debt for U.S. graduates.  

"Employees have not really had to care about their student debt burden over the last three years," says Barrett Scruggs, VP of workplace financial well-being at SoFi at Work. "So once payments restart, borrowers are going to feel an acute pain." 

One in five borrowers will struggle to pay back their loans when scheduled payments resume, according to data from the Consumer Financial Protection Bureau. This financial burden can carry an intense psychological one as well: a 2021 survey by Student Loan Planner found that around 7% of borrowers experience suicidal ideation due to the stress around their loans. 

Yet for some employees, there is relief available. Student loan repayment benefits have grown in popularity over the last several years, spurred by the impact financial stress and debt can have on workplace productivity and financial well-being. While 17% of employers currently offer a student loan repayment program, according to the Society of Human Resource Management, almost half plan to do so in the future, separate research from the Employee Benefit Research Institute found. 

Clean energy services company Avangrid is part of this growing contingent of employers, and since launching a student loan repayment benefit in February, has already helped employees pay off more than $300,000 in student loan debt. The benefit pays $250 per month, up to $9,000, directly to an employee's student loan provider. More than 430 employees have enrolled. 

Alexis McDonald, a talent acquisition recruiter with Avangrid, started at the company just five months ago and has already taken advantage of the repayment benefit. McDonald currently has around $30,000 left on her student loan balance, after graduating in 2006. McDonald had refinanced her loans into one personal loan, making her ineligible for any federal loan forgiveness benefits. 

"Prior to Avangrid, like a lot of people, I was just paying off what I could month-to-month," she says. "Now that I'm a mother of two small children, financial stability is huge for me. Prior to working here, it was a daily struggle, and emotionally something that I thought about a lot. I was always just trying to figure out the best way to approach making sure that I'm getting these paid in a timely manner so that there's no issue, and making sure my family is provided for as well." 

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McDonald says she was unable to save into her 401(k), and even had to dip into her account balance to cover her loan payments. As her own friends became eligible for loan forgiveness or took advantage of payment pauses throughout the pandemic, McDonald said she herself tried to stay positive about the persistent burden of her debt. 

"My friends would all be in group chats, being like, yay, my student loans are deferred, and I would kind of laugh about it but just had to move forward with my life," she says. "These are things that you can't control. I just had to find ways around it and make do with what I have."  

Alleviating debt is part of a larger push to remain appealing to new and existing employees, says Paul Visconti, Avangrid's senior director of health and retirement. Before implementing the benefit, his team surveyed employees on the specifics of their debt load: the most in-need employees were those in their 40s, and had over $40,000 in debt. Their survey also found that 50% would stay with the company longer if a student loan benefit was offered. That was enough to sell senior leaders on the idea, he says. 

"Everybody knows student loan debt is a huge societal issue and Avangrid is no different — we want to attract and retain key employees, and we really have to go out of our way to differentiate ourselves," he says. "It really is a game changer for people knowing that they can pay this down quicker. It just eases their mind. And we think that leads to feeling better about the company, which makes you more engaged and then subsequently, more productive." 

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The student loan repayment benefit compliments a variety of financial wellness offerings Avangrid provides, like a 401(k) match program and emergency savings funds. These offerings align with the overall desire to support employees with their total well-being and will become even more vital as more employees struggle with debt and financial stress, Visconti says.

"We want to make each individual person's life a little bit better, ease their financial burden and their mental burden, too," he says. "If you want employees to feel good and to stay longer and be ingrained in your workforce, they want to feel like they're taken care of compensation wise, benefit wise, culture wise. [Student loan repayment] checks all those boxes, and makes them understand that we care."  

For McDonald, the benefit has solidified her loyalty to Avangrid — she says she will "never leave." She urges other employers to recognize the difference student loan benefits can make, and hold up their end of the bargain in the employer-employee relationship. 

"I think it's huge for employers to really look inwards and understand that your employees are your biggest asset," she says. "We work hard to keep the company afloat, and it's just such an important thing to provide essential needs for your employees. Student loan forgiveness for a lot of people is an essential need."