Even with college tuition rates continuing to rise most experts still agree that a college education is worth the investment. Studies have shown that college graduates on average earn more money and have more career opportunities. Policymakers continue to work on plans to make college more affordable while the White House has worked to provide reduced payment plans that will ease the burden of student loan debt.
The Obama Administration and Congress have introduced several income-driven repayment plans over the past 10 years to give student loan borrowers relief. These repayment plans base the monthly student loan payments on the borrower’s income and the size of their family which usually ensures these payments are affordable for most borrowers. And depending on the plan, after 20-25 years the remaining loan balance is forgiven.
However, many borrowers are still not aware that these programs exist or if they are aware, they don’t know how to enroll in them. On top of this, student loan servicers failed to pick up the slack when it came to spreading awareness on IDR plans. Because of this the White House announced a campaign six months ago called the Student Debt Challenge. The purpose of this campaign is to raise awareness of the existing income-driven repayment plans and the goal is to enroll 2 million borrowers into an income-driven plan.
The idea is to involve employers in spreading the word about income-driven payment plans. Fidelity Investments introduced a program called the Step Ahead Student Loan Assistance Program which provided longtime employees with a student loan repayment benefit and also educated them on their repayment or forgiveness options.
Rite Aid is working with their 90,000 employees to bring awareness to income-driven repayment plans and offering reminders about enrollment cut-off dates. The National Housing Resource Center is training housing counselors to work with their clients to help them find repayment plans that could help them financially.
Overall, more than 40 organizations have pledged their contribution to help educate and work with borrowers on finding an affordable repayment plan. The Department of Education offers a free toolkit to employers that they can use to help educate their employees.
Just three months into the campaign, participation in income-driven repayment plans has increased to 23 percent of all borrowers, which is up from 4 years ago when participation was only 5 percent. The data also indicates that these plans are helping borrowers who have higher student loan debts and lower monthly incomes.
Employers assisting their employees in managing their student loan debt is the logical next step in this process. Increasingly, employers are offering student loan reimbursement as part of their benefits package. These benefits can help hire and retain employees like millennial workers, who tend to switch jobs more often. The relief from the stress of high student loan payments can help increase employee productivity, and employers know this.
Any business, nonprofits, and educational institutions that would like to be highlighted as participating in the Student Debt Challenge can sign up to commit here.