Student debt relief trumps other benefits
Student loan repayment programs are climbing the pantheon of employee benefits, suggests a recent survey of full-time workers with student loan debt.
Pollfish found that 23% would gladly give up healthcare benefits for a student loan repayment benefit. In addition, 46% would relinquish paid time off and 33% would do the same for retirement benefits in exchange for a repayment benefit. Also, 53% said they’d consider a salary cut in exchange for a student loan repayment benefit.
David, Chen, founder of Millennial Personal Finance, which conducted the study, believes student loan repayment benefits can help employers recruit young talent and appear more marketable to this workforce segment. “Students are leaving school with hampering debt, and monthly student loan payments, not healthcare, rank among their chief concerns,” he says.
“The message to employers is clear: student loan repayment programs are quickly becoming an essential part of their benefits portfolio in hiring and retaining top talent,” adds Krystie Dascoli, director of voluntary benefits at Pacific Resources, which consults on student loan reimbursement products.
With 57% of the millennials surveyed citing loan debt as a major stressor affecting their daily productivity, Dascoli believes the return on investment associated with offering a student loan repayment program “is essential to driving the company’s bottom line.”
Of 1,000 college graduates polled by SoFi, an online personal finance company, 90% were more willing to accept a job offer at a new company if their employer offered a student loan contribution benefit. In the Pollfish survey, 84% gave the same response.
“With student loan debt now reaching upward of $1.3 trillion in the U.S., there’s never been a more important way to help employees reach their financial goals faster,” says Samir Qureshi, VP of business development at SoFi.
Indeed, the U.S. Department of Education estimates as many as 42.3 million Americans owe $1.33 trillion in federal student loans, while the Federal Reserve notes millennials pay on average $351 a month toward that debt and their median monthly payment is $203.
With 70% of today’s graduates leaving college with some form of student debt, Gradifi Chief Marketing Officer Meera Oliva says it’s not surprising to see student loan repayment benefits are on the radar for millennials.
As for benefit plan tradeoffs, she notes that “health insurance and retirement planning feel like far-off worries when you are young,” whereas the impact of student loan payments is immediate. “Student loan repayment and other financial wellness benefits are a great way for employers to think strategically about offering employees benefits that are meaningful.”
Nearly 20% of Pollfish respondents said they receive a student loan repayment benefit from their employer and 65% reported they receive matching contributions each month.