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HR 101: A history of student loans and the importance of debt-relief benefits

Outstanding student loan debt in the US currently stands at $1.75 trillion—including federal and private loans.
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Francis Scialabba

less than 3 min read

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Welcome to HR 101. Class is now in session. Today’s discussion will be about the burden that student loans can have on employees—and how employers can help alleviate the stress.

The history. The student loan system as we know it today started to take shape in 1992, when the Higher Education Amendments created the FAFSA, direct lending, and unsubsidized Stafford loan programs, according to a report by LendEDU. In 1993, the Student Loan Reform Act formalized the Direct Lending program, allowing students to borrow directly from the government instead of private lenders, which had been the only option since 1965.

The rise in the cost of college has outpaced the rate of inflation by 171.5%, according to the Education Data Initiative, and students have increasingly turned to federal and private loans to help finance their education.


Fast-forward. Outstanding student loan debt in the US, from federal and private loans, currently stands at $1.75 trillion, reports Forbes. More than 43 million Americans (primarily Gen X, millennials, and Gen Z) have student loan debt, according to BankRate.

At the start of the Covid-19 pandemic, the Department of Education paused federal student loan payments as an emergency measure. But that forbearance ended last month, and now borrowers have to pay up.

One option HR leaders have to attract, retain, and engage talent is to advocate for their organization to offer a student loan repayment program. Some 70% of 2024 grads say their debt will influence their career decisions, according to CNBC, and 86% of employees would commit to a company for five years if the employer helped pay back their student loans, according to ASA data cited by SHRM. Furthermore, 49% of employees surveyed by PwC said they are distracted by their finances at work—a benefit that positively impacts workers’ financial lives can help them refocus and be more productive.

If employers are resistant to any student loan repayment benefits, there are other avenues HR can take, according to SHRM, including financial counseling benefits, debt consolidation services, and greater flexibility within retirement plans so employees can redirect some of their 401(k) contributions to debt repayment.

Is there a subject you want to see covered in HR 101? Email [email protected] with your ideas!

Quick-to-read HR news & insights

From recruiting and retention to company culture and the latest in HR tech, HR Brew delivers up-to-date industry news and tips to help HR pros stay nimble in today’s fast-changing business environment.