Student Loan Defaults Rise as Employers Boost Assistance by 250%

Student loan borrowers in the United States are confronting a daunting summer as the reprieve for those who had defaulted on their loans ended in May. The Trump administration is poised to garnish the wages, tax refunds, and federal benefits of individuals in default, potentially affecting millions of Americans. This development follows the dissolution of the hope for widespread debt forgiveness, leaving many borrowers in a financially vulnerable position.

In light of this escalating crisis, employers are increasingly providing benefits to assist workers burdened by student loan debt. The number of employers offering student loan assistance has more than tripled over the past five years, increasing from 4% in 2019 to 14% in 2024. This trend is also evident in job listings, with the number of postings that included loan assistance doubling between 2019 and 2023.

Employers have a variety of options to support their employees in managing student debt. These options include integrating loan repayment support into retirement plans, providing educational assistance, or allowing workers to exchange unused paid time off for loan payments. Benefits specialists note that while these programs may encounter certain challenges, they can substantially improve employees' financial stability and peace of mind.

Jeremy Yonan, VP of total rewards at a job site, underscores that business leaders cannot overlook the financial pressure that student loan debt exerts on their employees. He points out that this debt is not merely a personal challenge but a business imperative, as its effects are felt throughout the workplace. By offering student loan assistance, employers can help alleviate this financial burden, resulting in a more stable and productive workforce.

The repercussions of student loan debt on employees are significant. Nearly 2 million borrowers are at risk of having their wages garnished this summer, exacerbating the financial strain they already endure. Employers who take proactive measures to support their employees in this regard can cultivate a more supportive and loyal workforce, ultimately benefiting both the employees and the organization.