SEPTEMBER 2020HR TECH OUTLOOK8In MyOpinionThe Student Loan Crisis Carries On Behind the Scenes Brian Hamilton, Vice president of SmartDollar, a financial wellness program from Ramsey SolutionsByThe Coronavirus pandemic is shining a spotlight on a huge problem: Business owners and corporations --many of your employees--just aren't very good with money. Even before the pandemic hit, many were living paycheck to paycheck, were in debt up to their ears, and lived above their means. 1 And for 44 million people, the financial fallout of the pandemic has been made worse by the fact that they're anchored by student loan debt.2 The student loan crisis is a result of the insane inflation of college costs and harmful marketing of debt toward students. They were sold the message that they needed a college degree to get a good job or make a decent living. They were told loans were the only path to an education. Some were even promised their loans would be forgiven after they graduated and worked a few years. And now? Those messages have been proven to not only be flat-out wrong but also bald-faced lies.As a result, millions of people are now vulnerable to a whole range of predatory debt products. Think things like certain loan refinancing options, debt consolidation, and dangerous, habit-forming earned wage access programs and paycheck advances. The companies offering this junk to your employees are just out to make a buck off the situation.That leaves a lot of student loan borrowers feeling trapped--and some of them are members of your team. What the CARES Act Did for Student Loan BorrowersThe financial fallout from the pandemic got so bad that Congress passed the CARES Act as a sort of Band-Aid solution. For borrowers, the bill put an administrative for bearance on almost all student loans until October, meaning they don't have to make payments until then and no interest will be accrued. For employers, the CARES Act made it easier for them to help their employees pay down their student loan debt through student loan employer programs. They can now match up to $5,250 per employee per year tax free until at least Brian Hamilton
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