The “One Big, Beautiful Bill” has officially passed, and with it, major updates to the federal student loan system. For many employees, this means higher student loan payments over longer timelines. As an employer, you may be wondering how these changes will impact your benefits strategy, and your role in employee financial wellness.
To help, we’ve answered some of the most pressing questions you may have below.
- How does the ‘big, beautiful bill’ affect my employees?
Currently, the government offers borrowers options that reduce their lower monthly payments based on their income and offer a path to loan forgiveness to reduce their overall student loan debt. One of the biggest changes from the ‘big, beautiful bill’ is that many of these options are being replaced with the Repayment Assistance Plan (RAP). For most borrowers, the RAP has higher monthly payments and a longer repayment period compared to current income driven repayment options.
However, the new law also creates a limited, one time opportunity over the next two years for borrowers to lock into legacy repayment plans that avoid higher payments and an additional decade in debt.
If you are a non-profit organization, your employees may also be asking about Public Service Loan Forgiveness (PSLF). The good news: PSLF is unchanged. Employees who are working toward forgiveness can continue to make progress, and all credits earned so far still count.
- What does this mean for me?
With 80% of the workforce either having student loans themselves, having taken student loans out for others, or planning for children’s college, these changes will affect many of your employees.
Here’s what you may see:- More employees seeking financial support or side income.
- Increased questions to HR about loan changes.
- Reduced take-home pay, especially for employees facing wage garnishment.
- Greater financial stress, which research shows can lead to lower productivity, absenteeism, and turnover.
- What can I do to better support my employees?
By connecting employees with existing student loan programs before they sunset, you can help grandfather them into lower payments and higher overall savings. This means unlocking hundreds of thousands of extra dollars to attract and retain talent, at no extra cost to you. Here’s what you need to know:- Federal forgiveness programs, including Public Service Loan Forgiveness (PSLF), can still generate thousands in savings. Your employees are eligible for programs to eliminate all their student loan debt after 10-20 years of payments, depending on your eligibility.
- The faster you act, the more you save. Connecting employees with the right plans now means they can cover more of their payment term at a lower monthly rate, and ultimately more savings.
- There is still time to grandfather employees into plans with lower monthly payments. Employers who act now can help their employees understand the best plan during the transition and when to take action to get grandfathered into the right existing repayment plans.
The ‘Big, Beautiful Bill” has now also made Section 127, the tax-free employer student loan repayment benefit, permanent and indexed to inflation. That means you can enhance student loan assistance by contributing up to $5,250 a year per person to help employees pay down their student loans -- tax-free for them and payroll tax-deductible for you. Since it is indexed to inflation, this benefit will continue to grow over time.
How Summer can help
Want to get started in providing support for your employees? Summer is here to help. Summer helps grandfather employees into federal loan programs before it’s too late, so that you can increase employees’ take home pay at the highest rate available at no extra cost to you.
Contact us to see how Summer can help you turn a federal policy change into a financial wellness win for your team.
Ask Summer: We know many employers still have questions about what the bill means for them and their employees. Ask your questions here in this anonymous survey, and we’ll answer them on LinkedIn.
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