Credit union adopts digital piggy bank benefit for student loan repayment
A latte costs $4.50 — round it up to $5 even and that extra 50 cents can help employees pay off their student debt years sooner.
UMassFive College Federal Credit Union is experimenting with such a benefit. The credit union's new student loan repayment benefit uses change from employees’ personal purchases to pay down the interest of student loans. All 125 UMassFive employees have access to the benefit through its digital platform and app. The credit union’s executives are confident the new addition, which is provided through student loan repayment vendor FutureFuel.io, will make them attractive to job seekers.
“We see that student loan repayment benefits are becoming an edge for employers in highly competitive job markets,” says Lauren Duffy, executive vice president and chief operating officer of UMassFive. “For our employees, we see this as getting out ahead of the curve a bit before our own competitors adopt similar programs. At our core, we feel offering student loan repayment benefits is the right thing to do and sends potential employees a positive message about our values.”
The Massachusetts-based credit union belongs to a network of 275 collegiate credit unions called Student Choice, who partnered with FutureFuel.io last year to introduce the benefit in all of its locations. Six of Student Choice’s own employees are currently using the benefit, says David Lane, human resources director at Student Choice.
The number of employers providing student loan repayment benefits doubled from 4% in 2018 to 8% this year, according to the Society for Human Resources Management benefits survey. But Lane says too few employers offer the perk. He sees the disparity as an opportunity for Student Choice branches to attract new talent.
“We’re highlighting it extensively in recruiting efforts,” Lane says. “It will definitely help to differentiate us if a candidate just graduated, or with somebody working on a graduate degree.”
Laurel Taylor, founder and CEO of FutureFuel.io, says the benefit can shave years off the time it takes an employee to pay off their student loans. As employees spend money, FutureFuel.io collects the change from rounding up purchases to the next dollar and stores them in a virtual piggy bank. When the platform collects $20, or another employee-set goal, it deposits the funds into the student loan with the highest interest rate.
“Student loans are generally broken up into six different loans with varying interest rates,” Taylor says. “By putting [the money] toward high interest loans, you’re able to get up to half a decade of your life back.”
Taylor says the platform’s features were designed to be a gamified experience to encourage user engagement. UMassFive representatives say the benefit has been well-received by their workforce.
“It’s more than just an employer-paid benefit because it gets the user engaged in a plan for reducing their debt,” Duffy says. “The round-up feature is a unique tool for fostering that engagement — it shows the user that reducing their student loan debt is something that can be tackled in small attainable ways on a daily basis.”
Credit union employees aren’t the only ones who can access the student loan repayment program; the partnership between Student Choice and FutureFuel.io makes the benefit available to participating credit union members too. Lane says it’s part of a strategy to increase the credit union’s competitiveness in the consumer market.
“Only a small percentage of employers provide student loan repayment [benefits],” Lane says. “Our partnership is providing higher education financing solutions — something that’s greatly needed — to a lot more people.”