The Hidden Perils of “Free” Student Loan Assistance —and Why Employers Should Choose Wisely

As student loan repayment re-enters the national conversation, HR leaders are under pressure to support employees who are navigating unprecedented levels of financial stress. Approximately 43 million Americans hold federal student loans, and many are struggling to balance repayment with rising living costs. Offering a student loan solution can be one of the most impactful ways to support employee retention, engagement, and wellbeing. But here’s the catch: many student loan assistance vendors use pricing models that undermine the value these programs are meant to deliver.

The Problem with “Free” Vendor Models

At first glance, vendors that provide student loan assistance at no cost to the employer may seem like an attractive option. But in many cases, these companies are funded by lenders, creating a dangerous conflict of interest. Instead of helping employees make the best choices for their financial future, the vendor is incentivized to push more loans and encourage refinancing-- even when employees might qualify for federal forgiveness or income-driven repayment programs. As a result, employees may lose access to tens of thousands in potential savings, reducing the program’s value for both the employer and employee. 

Why Employee-Paid Models Fail

Another model pushes the cost directly onto employees. Here again, the appeal is understandable: it minimizes employer expense. But the reality is employees who are already stretched thin financially are unlikely to pay for help. The very people who would benefit most disengage, and utilization remains low. Employers end up with a benefit that exists on paper but delivers little impact in practice.

The Employer-Funded Model: Small Cost, Big Return

The most sustainable approach is also the simplest: employers cover a modest annual program license fee. In this structure, vendors earn revenue not from lenders or from employees, but from the employer’s commitment to workforce financial wellbeing. This aligns incentives across all stakeholders. Employees receive unbiased guidance. Employers maximize engagement and impact. Vendors sustain their business without hidden conflicts.

And the ROI is undeniable. At Summer, for example, our programs typically cost just 10% of a standard tuition assistance program, yet generate 20x the savings impact for employees. That means real dollars back in the pockets of staff, measurable employee retention, and a benefit that truly delivers on its promise.

Why Structure Matters for HR Leaders

Choosing the right student loan assistance model is more than a procurement decision-- it’s a strategic one. A misaligned model risks eroding employee trust and wasting benefit dollars and HR leaders’ time. By contrast, a well-structured program signals that leadership is committed to employee wellbeing, and can be a powerful recruitment and retention tool with strong ROI results.

The lesson is clear: when evaluating student loan vendors, HR leaders should look beyond the headline cost and focus on incentive alignment. Programs that rely on lender fees or employee payments may look “cheaper,” but they carry hidden risks that undermine long-term success.

The Call to Action

Student loan repayment is one of the most pressing financial wellness challenges of our time, and employers have a unique opportunity to deliver meaningful impact where employees need it the most. By choosing vendors that put employees first, HR leaders can unlock the greatest possible financial relief for their workforce.

In benefits, as in business, how you pay matters just as much as what you provide.

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