Businessolver, a SaaS-based benefits administration technology provider, has teamed with online finance company SoFi to provide student loan refinancing as a benefits package for younger workers. The two companies are looking to benefit brokers and advisers to help them market the offering to employers.
Employees who refinance their student loans through SoFi save an average of $18,936 over the term of their loan, according to Businessolver. Employers can include the offering in their benefits lineup at no cost, though they have the option of making contributions. Employees refinance directly with SoFi, through its technology platform, and choose among products with either fixed or variable rates and a variety of loan terms.
“I think that these newer, non-traditional worksite kinds of products are absolutely becoming more prevalent,” observes Rebecca Braman, senior voluntary benefits account manager at Lockton, whose brokers are helping spread the word about the student loan package. She sees real value in “bringing new and different ideas to the human resources team to help them attract and retain millennials.”
It’s easy to see why more employers are including student loan refinancing and assistance programs as part of their benefits suite. Consider, for instance, that:
- The average college graduate holds about $28,950 in student loans, per the Project on Student Debt, an initiative of The Institute for College Access & Success.
- Nearly 70% of new college graduates assumed loans to help pay for their education, according to the Pew Research Center.
Various federal government estimates peg the total amount of U.S. student loans in excess of $1 trillion – a figure that’s said to be growing at a rate of nearly $3,000 per second.
Concern is even trickling down to those who are still in high school and middle school. A recent Goldman Sachs study found that 46% of the post- millennial generation — so-called Gen Zers — are worried about student loan debt.
The student loan package available is year round and does not have to be tied to annual enrollment, says Jennifer Daniel, VP of carrier development at Businessolver. For benefit brokers and advisers, she believes the student loan refi benefit offers an opportunity to differentiate themselves with a relatively unique product that adds an important element of financial wellbeing to a benefits program.
The product, however, is not a commissionable product. “So for those brokers who are just looking at the dollar signs, this isn’t going to drive a lot of revenue for them,” Daniel cautions. Rather its value, she says, is what it will contribute to “the way that their client sees them as providing an overall strategy.”
From an employer’s perspective, Daniel considers the benefit is a great way to attract and retain young talent. “We’re a perfect example,” she says, noting that half her company’s workforce consists of millennials.”
Adding an employer contribution has the potential to turbo-charge the SoFi refi benefit. “If you work for an employer, and they help you pay off $10,000 of your student loan debt, you’re going to be more loyal to that employer,” she maintains. And to make the offering even stickier, the employer “can consider some kind of vesting to help retain you; almost like a 401(k) match.”
The notion of refinancing a student loan is far more tangible to millennial employees than benefits like accidental death and dismemberment or critical-illness insurance, which Daniel believes can be perceived as outmoded in comparison.
Quote"Millennials are looking for more competitive benefits when job seeking."
With most employees saddled with anywhere from $6,000 to $40,000 in student loan debt, she notes that “they can’t even think about disability benefits, or a 401(k), or starting a family, because they’re so overwhelmed.” Reducing the emotional and financial stress induced by these loans, she says, also improves productivity.
“While free meals, a ‘bring your pet to work’ policy or happy hours are nice perks, millennials are looking for more competitive benefits when job seeking,” adds Rae Shanahan, chief strategy officer at Businessolver. For advisers to hold onto their client relationships, she says, it’s critical to present new and different ideas. Without them, “you’re not doing a thorough job [for] that client.”
Daniel notes that SoFi offers a range of financial products such as personal loans, mortgages and wealth management solutions. Since its 2011 launch, the company has funded more than $8 billion in loans.
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