About 43 million Americans have federal student loan debt, according to the Education Data Initiative. Even before the pandemic, outstanding student loan debt in the United States exceeded $1.7 trillion, becoming a bigger burden on households than even credit card debt. Two years after the federal government suspended student loan repayments and lowered the interest rate to 0%, up to half of those in debt may now be at increased risk of falling behind, according to a recent report by the Government Accountability Office.
As part of his 2020 campaign, President Joe Biden pledged student loan debt relief if elected, even tweeting that the government should cancel a minimum of $10,000 per person in federal student loans, as originally proposed by US Senator Elizabeth Warren.
Additionally, we should cancel a minimum of $10,000/person in federal student loans, as proposed by Senator Warren and his colleagues. Young people and other students in debt have borne the brunt of the latest crisis. This shouldn’t happen again.
—Joe Biden (@JoeBiden) March 22, 2020
Well, he’s been in the job for over a year, and no such action has been taken. In fact, the Biden administration extended the break again on student loan repayments only after increased pressure from politicians in his own party, as well as the public. It looked even bleaker for borrowers after Biden failed to address student loan debt at all during his first State of the Union in March.
With no government to rely on, employees seek relief from the private sector. More than half (57%) of employees believe employers should play a role in helping them pay off student debt, according to Betterment. Additionally, 85% of employees with student debt would likely quit their job if they found an employer who helped them manage their debt.
This is why tuition refunds are on the rise, as companies compete for talent during the Great Resignation. Until 2025, employers can continue to contribute up to $5,250 per employee per year to eligible education expenses without increasing the employee’s taxable gross income under Section 127 of the Internal Revenue Code. In February, Herschend Enterprises, which oversees Dolly Parton’s theme park and resort, Dollywood, announced that it would cover all tuition, fees and books for employees wishing to continue their education. Companies with similar plans include Amazon, Walmart, Starbucks and Newport Beach, Calif.-based Chipotle.