Why employers should offer a student loan benefit
Traditional benefits have stood the test of time because everyone at some point in their lives will need to start saving for retirement or will need to cover some large medical expense for either themselves or a loved one. But for many millennials, these benefits are not on their radar. Instead, they are looking for ways to pay down substantial loan debt that they can be saddled with for the next 10 years or longer.
Advisers who are looking for ways to assist their clients with recruitment, retention and engagement should be examining ways employers can develop a plan to assist with education loan debt.
Tracy Clemente, benefits manager for Chegg, spoke about their partnership with Tuition.io to extend an education loan repayment benefit to their employees who are fresh out of college and need to reduce the amount of time it’ll take to pay off their debt.
“I find that between one and two years people will leave their footprint at a job and then move on to the next one,” Clemente said. “But we want to keep the talent because we looked for a long time for some of these positions.”
This is when Chegg chose to target college graduates for the means of finding a benefit that would convince them to stay with their company for longer than two years. “The reality is that 70% of college graduates leave school with student loan debt, and $1.3 trillion is built by over 40 billion borrowers causing some of these individuals spend the next 21 years paying off their debt,” Clemente says.
Chegg began its student loan repayment benefit in 2015 and had 57 loans funded and three loans were paid off. In 2016 these numbers rose to 72 loans being funded and five loans being paid off.
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“If a company introduces a program that allows for $150 a month to be paid toward an employee’s student loan debt, it doesn’t sound like much, but in four years or less that employee could save $15,220,” Clemente said.
Besides just offering the benefit and informing new employees that the benefit is available, Clemente said there is very little she needs to do to convince employees that need the benefit to sign-up for it.
“There is no limit as to how long we offer the benefit no matter how long the employee is with the company,” Clemente said. “One company I spoke to said they wanted to do a monthly benefit, but for us we want to retain our employees past that one to two year mark.”
These student loan repayment benefits also work for more than just education loans, but other loans as well, and Clemente said offering this kind of voluntary benefit has shown great promise for retaining Chegg’s employees past the average retention time seen for most millennials today.