Employers eager to recruit and retain skilled workers in a tight labor market have about 1.34 trillion reasons to expand their benefits package to include assistance in helping employees repay their student loans.
That’s the mountain of student loan debt being carried on the financial shoulders of 44 million Americans. And no surprise, the bulk of those would indeed love for the boss to kick in and help pay it back.
More than 80 percent of workers with student loans surveyed by IonTuition said they would like to work for a company that provides a student loan repayment benefit. IonTuition, a fintech company focused on services to help borrowers manage their repayments, mostly surveyed millennials.
“It’s going to take a change in the tax code to see large growth in the benefit.”
Yet there is plenty of reason to suspect older workers would be eager for the perk, too. According to Federal Reserve data, borrowers at least 40 years old have a not-small $450 billion in student loans to pay off. A big part of that older cohort are parents who borrowed through the federal PLUS program or took out private student loans.
The benefit is still clearly in the early adopter stage with just 3 percent of firms surveyed by AonHewitt currently offering student loan repayment assistance. AonHewitt says an additional 5 percent of surveyed companies say they are likely to add the benefit and 24 percent are moderately interested in adding the benefit.
“Employers are incredibly curious and engaged around the issue given all the news about student loan debt,” said Bajali “Raj” Rajan, chief executive officer of IonTuition. He said IonTuition fields two or three inquiries a day from companies interested in adding student loan repayment assistance.
A few big old-line firms including Aetna, Fidelity, PwC and Penguin Random House have begun to contribute to employees’ loan payments. Earlier this summer, the city of Memphis, Tennessee, announced it will contribute $50 a month toward employees’ student loan repayment.
Adoption of the benefit is more common among smaller and mid-size companies with nimbler decision trees and the need to position benefits as a competitive edge in recruiting, according to Meera Oliva, chief marketing officer at Gradifi, a subsidiary of First Republic that provides a student loan benefit platform for employers, including PwC and Penguin Random House.
Gradifi has more than 140 employer clients offering repayment assistance and is adding a half dozen or more monthly. “The bulk of our business is companies coming to us, not the other way around,” Oliva said.
An employer contribution of $50 or $100 a month is common among the first movers. That can indeed be a big help, as IonTuition reports that about three-quarters of borrowers make monthly payments of $300 or less.
Employer contributions go toward principal repayment. Gradifi’s website includes a free tool for employees to see how an employer assist can aid employee financial wellness. For instance, someone aiming to pay off $35,000 in debt over 10 years might be able to shave off 2.5 years and save some serious coin in the process: