Employees clamoring for student debt benefit
Employees are eager for employers to offer a benefit that will help them tackle their student loans, arguing the move will not only help them personally, but it also will increase their motivation and loyalty to their employer.
That’s the main finding from research by American Student Assistance, a Boston-based nonprofit that focuses on eliminating finances as a barrier to further education and professional growth. In the organization’s survey of more than 500 employees between ages 22 and 33 (as well as more than 400 HR managers), student loan repayment was the third most important employee benefit, behind health insurance (82%) and a 401(k) match (74%).
Significantly, 86% of employees said they’d stay with a company for at least five years if their employer helped pay down their student loans.
That statistic, says Julie Ryder Lammers, director of consumer advocacy for ASA, “should be a highly motivating factor for companies to step up and gain immediate loyalty from their employees.”
“If employers want to set themselves apart in order to attract and retain the best talent, they should start considering offering student loan assistance, whether (it’s) repayment or student loan counseling,” Lammers says. “Our research also shows that while human resources managers are starting to recognize this issue, there is still a gap in understanding [how significant the problem is]. Many companies today already offer a variety of benefits and perks — more than just healthcare and 401(k) plans — and student loan assistance should be factored into their offerings.”
If companies offered perks like signing bonuses for student debt, a matching program for student loan payments, or financial planning, more than 80% of employees say they would take advantage of them, according to the ASA research.
Though only a small amount of employers offer student loan repayment benefits, the category is increasingly getting more attention. Companies including Aetna, Staples and Penguin Random House have recently implemented the benefit.
U.S. Reps. Rodney Davis (R-Ill.) and Scott Peters (D-Calif.) last week introduced a bill, the Employer Participation in Student Loan Assistance Act, that would engage private employers and encourage them to offer a tax-free benefit to put toward an employee’s student loan debt, similar to the existing tax benefit for tuition assistance. The legislation, Davis says, encourages employers to be part of the solution to the nation’s growing student-debt problem by allowing them to offer a tax-free employee benefit that will help graduates pay down their loans.
Many employer groups, including the Society for Human Resource Management, have come out in support of the bill, saying it’s a win-win for employers and employees. Lammers agrees.
“This is a great first step to encourage employers, who are one of the primary beneficiaries of a highly educated workforce, to become a solution to the student-debt challenge facing our nation,” she says.
Student debt is a growing problem for employees: There are more than 44 million borrowers with a total of $1.3 trillion in student loan debt in the U.S., according to the latest statistics. And, according to ASA, the burden it impacting workers on the job: 56% worry about repaying their loan either all the time (26%) or often (30%). Forty percent report that worrying about their student loans has impacted their health, while 61% have considered getting a second job to help pay off their student loans.
Though young employees were the focus of the ASA survey, Lammers says, “employees of all ages are feeling the impact of student debt — whether it’s millennials trying to pay down education debt while simultaneously forming their own household, Gen X struggling to repay their existing college debt while at the same time save for retirement and their kids’ college, or baby boomers figuring out how to pay for their children’s or grandchildren’s college with retirement right around the corner.”
The strong desire for student loan repayment as an employee benefit, she explains, stems from that financial stress and the struggle to pay off loans.
Still, “loan repayment isn’t the only option for companies,” she says, noting that employees would also welcome help with financial planning or student loan counseling.
“Programs like these are part of a holistic approach we have to take to solving our nation’s debt problems,” she continues. “There is no silver bullet that will eliminate the burden that millions of Americans are facing from college debt. We must do more to ensure that they are borrowing less in the first place, and we must do a better job to help them understand what they are borrowing. But for the 44 million Americans already struggling with student debt, a benefit that encourages their employer to help replay their existing student loans will go a long way to ease the financial burdens these borrowers struggle with on a daily basis.”