Benjamin Franklin once said, “An investment in knowledge pays the best interest.” Though the sentiment still rings true today, it’s the students who are now paying the interest, and often at great costs.
Millennials are the best-educated generation to date, but that knowledge can come with a steep price: nearly half of young American adults with a bachelor’s degree or higher have at least one student loan. With the total U.S. student loan debt reaching $1.5 trillion this year, it’s no surprise that financial wellbeing is top of mind for many. With tuition and student loan debt continuing to rise, benefits that address these concerns will continue to gain value with current and prospective employees. Here are 5 reasons why employers should consider incorporating student loan repayment programs into their benefits package:
Employers in Connecticut will soon be able to claim a tax credit for offering student loan repayment assistance. S.B. 72 was passed by the Senate back in May with the goal of helping employers attract and retain key talent in the state while reducing the financial burden for Connecticut workers. Starting in 2022, employers that make loan payments directly to state loan authorities can claim a credit equal to half of the payments they make during any given year.
Attract and Retain Top Talent
When planning out your benefits package, it’s imperative to look at what your current and prospective employees’ concerns are. According to PwC, when asked what they feel causes them the most stress, more employees cite financial matters than any other life stressor combined. By focusing on alleviating this stressor, employers have a unique opportunity to create a competitive advantage in the talent marketplace. According to the American Student Assistance survey, which looked at 500 employees between the ages of 22 and 33, 86% of employees would commit to a company for five years if the employer helped pay back their student loans.
This type of benefit is attractive to recent college graduates as well as more experienced candidates. About one in five Americans ages 30 to 44 are carrying a student loan debt, and that number jumps to one in three for Americans ages 18 to 29.
"One of the reasons that employers are taking notice is that student loan debt has a real impact on recruitment, retention and overall employee productivity.”
— Sangeeta Moorjani, head of workplace products for Fidelity Investments
Your Competitors Are Implementing It
Employers are taking notice and developing innovative new programs to help ease the financial burden of higher education. In 2019, 8% of employers, up from 4% in 2018, started offering student loan repayment programs to their employees. Several major employers, like Travelers and Fidelity, have implemented or announced plans to develop student loan repayment programs in addition to their existing tuition reimbursement programs.
A recent announcement from The Hartford Financial Services Group, Inc., states that the company will soon begin contributing up to $10,000 in funds directly to an employee’s loan provider for those participating in the student loan repayment program.
The increasing cost of student debt can cause a great deal of stress, and we want to help employees have more financial flexibility, enabling them to focus on their life and careers.
—Marty Gervasi, The Hartford’s Chief HR Officer
Financial Wellbeing = Happy Employees
The ASA survey, as mentioned earlier, found that half of the workers surveyed are worried about student loan debt most or all the time. This survey also highlighted how student debt negatively impacts their focus and wellbeing. With constant worrying, their own mental and physical health tends to suffer. In another study by the American Psychological Association, some workers said they thought about skipping (or actually did skip) doctor visits because of financial concerns.
Having a student loan repayment option or other type of financial wellness program added to the benefits offerings will help give your employee’s peace of mind at work. Both employers and employees have reported higher satisfaction with their benefit plans when financial wellness is offered, according to Prudential. Employees want your support. Helping them with their biggest concern will not only help reduce their financial burden, but you’ll be reducing their stress and anxiety and increasing their focus and productivity at work, leading to healthier, happier employees.
Fits All Types of Budgets
Myth-busting time! Employers are hesitant to add these programs as they are deemed too expensive or hard to administer, but this isn’t true. There are many options to create a student loan program that not only works for your employees but also for your bottom line. Even if it’s starting off by offering employees access to expert financial guidance, you can help them be successful as new borrowers tend to lack information regarding their repayment options. There are even some programs out there coming in at no cost to employers. Vendors, like Gradify or Fidelity, will work with you to tailor a program based on the specific needs and interests of the company’s employees.
Check with your carrier as well, as they may offer matching student loan repayment programs that employees can apply for—like Aetna, for instance, who offers up to $10,000 for full-time employees and $1,000 for part-time employees.