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Highway Benefits Raises $3.1 Million Seed Round to Scale Adoption of Student Loan Repayment as a Benefit
With student loan forbearance ending and employer contributions now a tax-free benefit, Highway aims to tackle nation’s $1.8 trillion student loan debt crisis
MANHATTAN BEACH, Calif., March 2, 2023-- Highway Benefits, which is increasing retention and employee financial wellness through modernized benefits, today announced it has closed a $3.1 million seed round led by XYZ Venture Capital, with participation from angel investor Roger Ferguson Jr. The company is focused on scaling its platform to address the $1.8 trillion in student loan debt that saddles 45 million borrowers with an average loan balance of $38,000 and monthly payments of $400. Highway is also announcing its integration with Rippling and availability in the company’s app store, making it even easier for companies on Rippling to offer student loan repayment benefits.
Signed into law in March 2020, the CARES Act allows employers to make tax-free contributions of up to $5,250 per employee per year to an employee’s federal and private student loans. Employer contributions are exempt from Social Security and Medicare payroll taxes. An employee receiving an annual salary increase of this same amount would typically receive less than $4,000 in take-home pay after income and payroll taxes. Student loan repayment as a benefit helps employees pay off current loans faster and saves them money by reducing interest on their debt.
“This is a pivotal year for student loans. While many details are unclear pending the Supreme Court hearing the case on President Biden’s loan forgiveness plan, student loan repayment is poised to resume for the first time in three years,” said Mick MacLaverty, Co-Founder & CEO. “Borrowers are wholly unprepared for this looming liability – 89% admitted to this in a recent survey and 27% said that one-third of their income will go towards loan repayment – but employers can play a critical role in the financial wellness of their employees.”
“Highway Benefits has created a product that is vital for employee financial wellness — they provide a long-term solution for the third of the workforce struggling with student loan debt and enable businesses to easily offer a compliant and competitive benefit that helps their employees pay down their student loan debt,” said Chauncey Hamilton, Partner at XYZ Venture Capital. “Mick and Cory are the perfect founders to build this company, having felt the pain point themselves. We are excited to see more and more companies adding Highway to their benefits stack; we ourselves are very happy customers.”
Highway Benefits was founded in 2021 by MacLaverty and Cory Micheel while both were graduate students at UCLA’s Anderson School of Management. Experiencing the burden of student loans firsthand, MacLaverty and Micheel sought to create a viable solution to this crisis by first focusing on student loan repayment as a benefit.
“Student loan repayment as an employer benefit is the single best dollar-for-dollar benefit since the introduction of the 401(k), with 86% of borrowers saying they’d commit to a company for five years if it helped them pay off their loans,” Micheel said. “It’s a fantastic way for companies to attract and retain top talent while also differentiating themselves from competitors in hiring. Unfortunately, less than 10% of companies today offer this benefit because many either don’t realize that these contributions are now tax free or don’t recognize how much their employees value it.”
Highway’s employee benefits platform makes it easy for employers to make tax-free contributions directly to their employees’ student loans. Employers can create and manage fully customizable contribution and eligibility rules, while Highway’s automated system ensures proper tax compliance and verifies benefit eligibility and qualified loans for participating employees. Highway allows employees to quickly connect their student loans through integrations with all loan servicers so they can begin saving immediately. The platform’s straightforward pricing ensures employers only pay for employees who have enrolled and are actively receiving contributions each month.
Employers, brokers and partners interested in a demo or learning more about the Highway Benefits platform can visit: https://www.highwaybenefits.com/. Companies that are using Rippling’s workforce management platform can also take advantage of Highway Benefits through Rippling’s App Shop.
Employees interested in requesting this benefit from their employer can visit: https://www.highwaybenefits.com/for-employees
About Highway Benefits
Founded in 2021, Highway Benefits is improving employee financial wellness and helping employers attract and retain top talent through modernized benefits. Highway’s first product, a student loan matching platform, allows employers to design a custom plan that gives them the ability to contribute to their employees’ student loans, resulting in a more engaged and secure workforce. Organizations interested in discovering how many of their employees have student loan debt can visit HighwayBenefits.com to learn more.