Fiat Chrysler takes on student loan crisis with new refinancing benefit

Fiat Chrysler is the latest employer to join the movement to help employees drive down their student loan debt.

The automaker partnered with student loan benefit provider CommonBond in late January to provide a student loan refinancing benefit, which allows employees to replace existing loans with a new, lower interest rate loan. Fiat Chrysler U.S. salaried employees with student loan debt, as well as employees with federal government-backed Parent PLUS loans, are now eligible to refinance these loans through the program with preferred terms.

The benefit has been taking off, says the maker of Jeep, Dodge and Ram Trucks: Since the program launched in mid-January, nearly 250 employees have started applications to refinance their student loan debt, which totaled $10 million. The automaker has more than 14,000 U.S. employees.

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Workers exit during a shift change at the Fiat Chrysler Automobiles NV Warren truck assembly plant in Warren, Michigan, U.S., on Thursday, Oct. 1, 2015. Fiat Chrysler Automobiles NV employees represented by the United Auto Workers are on the verge of rejecting a new four-year agreement that would provide raises for all its members and narrow the pay gap for second-tier workers. Photographer: Jeff Kowalsky/Bloomberg

The soaring amount of student loan debt — the nation’s student debt collectively nears $1.5 trillion, according to the Federal Reserve — was the catalyst for Fiat Chrysler to implement the benefit, says Maria Darbonne, manager of savings plans for carmaker.

“It’s a competitive and much-needed benefit for our employees,” she says. The benefit will “provide our employees a less-costly means to pay off student debt and support their path to a sound financial future.”

The student loan refinancing benefit is part of the company’s “Financial Fitness” initiative, which offers employees online tools and resources to help with financial goals, including budgeting and saving more money for retirement.

Though individuals can look into refinancing on their own, “many might not know that they should consider refinancing, or they are inundated with the options,” explains Tara Fung, vice president of CommonBond for Business, the company’s employer platform.

About 250 companies are working with CommonBond to help employees deal with the student loan burden. Fung says that student loan refinancing benefits are the “entry-level student loan benefit that CommonBond for Business offers” since all of the companies offer at least as such.

Humana is another company that is offering a refinancing benefit to its employees.

The value of employers partnering directly with a lender for student loan refinancing is twofold, Fung says: First, “employees can gain awareness around what refinancing is and when it can be helpful. Second, employees have the benefit of a lender fully vetted by their employer.”

See also: HR pros bust student debt benefit myths: ‘It’s not terribly expensive to fund or administer’

Other employers are going further in their efforts to help employees pay off student loans by offering contributions to workers’ principal debt amounts.

Sotheby’s at the beginning of the year began contributing $150 each month toward employees’ repayment of the principal amount of the debt, up to $1,800 per year. The international auction house says it will cover employees for as long as they remain an eligible full-time U.S.-based employee of Sotheby’s with qualifying student loans.

Estée Lauder also makes a $100 monthly contribution to employees’ student loans, up to a lifetime total of $10,000. Clothing retailer Carhartt, Pure Insurance and Crystal & Co., a national insurance brokerage firm with 450 employees, also announced similar plans to contribute to their employees’ student loans last year.

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