Providing a student debt relief valve for workers

By MassMutual Staff

By MassMutual Staff

Posted on Nov 6, 2019

A relief valve is used to release the buildup of pressure within pipes from steam, water or other fluids or gas. The valve is designed to protect the system from malfunctioning as too much pressure can break virtually any system.

Employers are increasingly installing relief valves of their own, relieving workers from another type of pressure: high student loan debt. Student debt reduction and elimination initiatives are becoming a key component of financial wellness programs as employers look for ways to help employees escape crushing liabilities.

One in two young workers worries about student loan debt all the time or often, according to a study by American Student Assistance (ASA), a private nonprofit group focused on the affordability of higher education.1 The level of concern is indicative of the pressure that many young people feel as they graduate college or vocational school, and start careers.

More than 40 million Americans are burdened by a total of $1.5 trillion in student loan debt, which amounts to an average of $29,800 in outstanding indebtedness per worker upon graduation, according to Student Loan Hero. 2 Carrying such a heavy debt burden can make it difficult for many people to pursue other financial needs, whether it’s buying a home, starting a family or saving for retirement.

It’s no wonder the ASA survey found that 31 percent of workers between the ages of 22 and 33 said student loan debt is their No. 1 financial concern and 59 percent said paying off those debts is a higher priority than saving for retirement. Because student loans are getting in the way of many people’s lives and goals, it can become a distraction at the workplace.

Helping employees address student loan debt not only can improve their lives, it has potential upsides for employers as well:

  • Greater loyalty. The ASA found that 86 percent of younger employees said they'd stay with a company for five years if their employer helped pay their student loans. Training new employees is an expensive proposition and losing an experienced employee can disrupt productivity.
  • Enhanced financial wellness. By helping employees better manage or even eliminate a big financial problem, employers are enabling employees to focus on other financial needs, whether it’s securing protection products like life and disability insurance or saving for retirement.
  • Improved productivity. With one less thing to worry about, employees who would otherwise be fixated on their student loans can now focus on other problems: like working smarter and harder. The burden of large student loans is no doubt a distraction for many people, one that can weigh on employees during the work day.
  • Stronger cost containment . Employees who are financially unprepared to retire at their traditional retirement age often continue working well past age 65, boosting an employer’s costs for salaries as well as healthcare, disability and workers’ compensation insurance. Enabling employees to focus on saving for retirement rather than paying off student debt can potentially improve their chances of retiring on time.

The good news is that there are several ways to help workers attack their student debts. What type of assistance employers make available through the workplace is a function of human resource and benefit goals, affordability and the employee population.

Most recently, the news media has reported on programs whereby employers actually help younger workers pay off their student loans as part of a retirement savings program or separately. In some instances, employers direct a portion of matching contributions that would otherwise be deposited in a 401(k) on an employee’s behalf to student loan debt repayment. The theory is that by dividing employer contributions between retirement savings and debt repayment, the employer helps the employee solve short- to medium-term financial issues while encouraging longer-term retirement preparation. Some programs actually direct payments towards student loans that parents have secured for their children.

Other student loan programs provide refinancing options for younger workers, their parents or both. Refinancing loans may make sense if the borrower can reduce current interest rates on loans, thereby lowering the total amount of repayments and freeing up money for other financial needs.

Whether a student loan repayment program offers assistance from an employer, refinancing options or both, employers should look for services that help workers better manage their overall student loan debt portfolio. The most effective programs allow borrowers to manage their debt through a consolidated summary of all their student loans from multiple sources, including both federal and privately held loans, and receive updates whenever loan payments are made.

Employers have options for student loan debt programs, many of which are available through financial wellness programs from retirement plan and benefits providers such as MassMutual. With thousands of dollars in student loans pressing on many Americans, think of incorporating a student loan management and debt repayment program as a financial relief valve for employees.

Then listen as the pressure relief valve releases steam.



1 American Student Assistance, “Young Workers and Student Debt Survey Report,” 2017,

2 Student Loan Hero, “Look at the Shocking Student Loan Debt Statistics for 2019,” Feb. 4, 2019.