Student loan debt has been a headline-grabbing issue for years as employers acknowledge that it exacerbates financial stress for workers, and while employers have taken steps to help employees, student-debt aid efforts "may be reaching a saturation point," said a report by Alight Solutions, Lincolnshire, Ill.
"While the prevalence of student loan consolidation programs has increased over the last few years, the percentage of employers that say they're very likely to add them has decreased," said the Jan. 12 report, based on a survey of 113 defined contribution plan executives whose plans cover 4.1 million participants. "A similar trend has occurred with student loan repayment assistance."
The most popular form of aid is student loan consolidation tools, offered by 28% of respondents in 2021, based on the survey conducted in the fall that included responses from clients and non-clients. In the previous year, 21% offered these tools.
Employers providing money to participants to help pay existing student loans was cited by 12% in 2021, up from 6% in 2020.
However, among employers that aren't offering these services, 49% said it was unlikely they would offer student loan consolidation tools and 61% said it was unlikely they would provide money to help pay off student loans.
Student aid is "a complex issue," said Robert Austin, the Charlotte, N.C.-based research director for Alight, in an interview. "Employers say, 'I'd like to do something, but I don't know how.'"
Other student-aid policies — such as employers contributing money to a 529 plan or employers contributing to a DC plan in return for participants paying off student loan debt — received little current support by sponsors. Four percent offered the 529 plan contributions, while 82% of sponsors that don't contribute said they are unlikely to do so. Three percent contributed money to participants' DC accounts if they make student loan payments. Sixty-three percent of sponsors that don't make such contributions said it is unlikely they will do so in the future.
Also, the report noted that 14% of sponsors provide a tool that allows for employee payroll contributions to a 529 plan. However, for those that don't offer this service, 56% said they are unlikely to offer it in the future.
Among sponsors that didn't offer the various types of student aid for participants, the Alight survey found little appetite for adding such assistance. Only 4% said it was very likely they would provide student loan consolidation tools; 4% said it was very likely they would add a 529 plan payroll contribution tool; and 4% said it was very likely they would link DC plan contributions to participants paying student loan debt. Two percent said it was very likely they would provide money to participants to help pay off student loan debt, and none said it was very likely they would contribute money to a 529 plan.
"I think the pandemic put loans on the back burner," Mr. Austin said.
