Student Loan help for employees sounds like a great concept, but the most common question we get is, “how does it work?”
Here’s a quick breakdown of the mechanics behind student loan benefits and how to decide if now is the time for your company to start helping employees crush their student loans.
STEP 1: FIX – FIND THE “RIGHT” STUDENT LOAN REPAYMENT OPTION
With the array of loan services, originators, interest rates, and repayment options, many smart, working people get lost somewhere in the student loan repayment mix. Data from American Student Assistance shows that 69% of borrowers faced serious confusion about loan repayment.
For companies looking to offer student loan help, the first and maybe biggest opportunity is to “Fix” their employees’ perspectives and help them get on the right repayment plan.
The wrong plan can mean hundreds of wasted dollars in interest and missing out on big opportunities for relief like public student loan forgiveness.
STEP 2: PAY – MAKE PAYMENTS EASIER AND SMARTER
Once employees opt in to the right repayment plan, there can still be 12 or more servicers and interest rates to manage. The second step in providing student loan benefits is to offer a platform that can streamline payment creating a single payment date, ensuring every payment is on time, and most importantly, making sure the right loans get paid off first.
At Student Loan Genius we call this “Genius Pay.” By using payroll and our platform we make payments simple (automatic deductions from payroll), smart (algorithms hunt for ways to make employees debt free faster), and synced (we turn multiple due dates into one).
STEP 3: MATCH – DIRECT MATCH TO PAY DOWN STUDENT LOANS FASTER
Repayment and easy payments are only half of the puzzle. The next two (and likely most valuable) parts of a student loan benefit are the Match and Save.
With Direct Match, every time an employee makes a student loan payment, their company makes a matching payment – this can effectively cut repayment time in half for some employees.
Contributing extra dollars toward one of an employee’s biggest debts can have a major effect on how an employee views a company and how long they stick around.
“When I heard about the employer match on student loans I was really jealous. It’s such a good perk.”
– Caroline, Student Loan Genius user since 2014
STEP 4: SAVE – EMPLOYEES SAVE FOR RETIREMENT BY PAYING OFF STUDENT LOANS
In the past when it came to making financial progress, many employees were forced to choose – pay off debt or save for the future. Now, with Genius Save, employees can both save for retirement while paying down their student loans.
For employers, the “Save” student loan benefit activates unleveraged dollars set aside for 401(k)s or other retirement plans. For employees, the student loan payment they were already making is converted into a wealth building opportunity.
THE NEXT STEP – GET YOUR COMPANY’S IMPACT DATA
Student loan benefits are perfect for companies who are serious about growing financial wellness. Understanding how they work is just one part of the puzzle.
The next step for any leader is to get information on how these benefits will impact your organization. If you help put together your company’s benefits package, submit the form below. We’d love to talk about helping you #crushstudentloans.
If you’re an employee, contact us to help start the conversation and let your company know you want help with your student loans.