NEW YORK, Aug. 26, 2019 /PRNewswire/ -- HSA administrators, Clarity Benefit Solutions, discusses the impact of student loan debt on employees.
Unfortunately, studies show that nearly half of this nation's young families are tasked with significant debt from student loans. Understanding how to tackle this debt can be challenging for this portion of the workforce. Employers can seize this opportunity to educate employees how to pay off this debt while simultaneously planning for retirement. This is especially crucial for employees who may want to pursue additional degrees.
While a majority of student loan debt affects employees in the age range of 25 to 40, it may come as surprise that some Gen Xers are also bearing the brunt of their children's loan payments—which can become a significant setback as they near retirement. Studies show that households that are paying off their offspring's student loan debt may not be able to maintain their standard of living after they retire.
A common struggle for employees with student loan debt is striking a balance between paying off the debt or saving for retirement. Employees who postpone saving for retirement until their debt is paid are selling themselves short—as they don't reap the rewards of compounding interest.
There are several methods employers can utilize to ease their employees' burden by looking closely at their budgets. For example, a recent report cited that each year employees leave a quarter of a billion dollars in 401(k) matching funds from their employers on the table. Employers can allow employees to use these company match funds for repayment of student loans—or permit them to split the matching funds to make a loan payment and set aside money for retirement.
Employers can also offer employees Student Loan Repayment Plans (SLRPs)—which allow employers to make monthly contributions to an employee's student loan provider while employees also make regular payments. This is typically administered through a third-party vendor and is applied directly to the principal. Progressive employers can use this tool to set themselves apart from the competition. While this option can initially be expensive, it can result in loyal employees who will be less likely to leave the company.
About Clarity Benefit Solutions: Clarity Benefit Solutions provides technology that makes the health insurance plan selection process fast, easy, and straightforward. For over two decades, we have provided clients with industry-leading technology, compliance, and exceptional customer service. Our offering is designed to save time and lower the costs of managing benefits while also promoting employee self-service and automated ACA compliance.