The 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 Borrowers

The 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 forbearance 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 the end of 2020.3 That means employers don’t have to pay payroll tax in addition to the employee not having to pay income tax on those contributions. Before the CARES Act made that possible, nearly a third of that money would go to waste in the exact same programs due to taxes. That’s big!

The problem is the student loan crisis is bigger. A Band-Aid alone can’t fix it. That’s

because the cycle of financial illness that goes along with it— Americans living paycheck to paycheck, going into debt, and living above their means—points to the real issue: behavior.

"At SmartDollar, we believe that a lack of financial wellness isn’t a math issue. It’s a heart issue"

Sure, Congress taking steps to cut student loan borrowers a break during a financial crisis is helpful in the moment. But it does nothing to fix the real problem your employees are having. And it’s not stopping them from bringing the stress of it all into work with them. How do you think they would have paid their student loan bills had the government not thrown them a bone? History repeats itself, and their credit histories point to debt being their answer. They need a plan to help them break the cycle.

The Right Answer Is Financial Wellness

At SmartDollar, we believe that a lack of financial wellness isn’t a math issue. It’s a heart issue. Real, lasting financial change begins and ends with behavior. So, for employers weighing the costs of offering financial wellness to their teams or thinking of offering a student loan employer program, they should remember that financial behavior is what will dictate whether or not their team will win with money.

As an employer, you’re uniquely situated to help your people get out of debt and take control of their money once and for all. That’s why we created our Guide to Workplace Student Loan Programs: to help employers like you know how they can help with their employees’ student loan debt and understand the issues around it. Access Your Guide.

Brian Hamilton is vice president of SmartDollar, a financial wellness program from Ramsey Solutions.