Survey: 3 in 4 Employers Planning to Roll Out Student Loan Repayment Benefits
The official unemployment rate is now at 4.3 percent – the lowest the benchmark jobs rating has been since mid-2007. Which means employers nationwide have been having to hire and promote against a stiffer marketplace for talent.
Nearly across the board, employers are being forced to sweeten pay and benefits packages and work-life balance arrangements for skilled and even semi-skilled employees (though unskilled workers in many areas appear to be getting left behind, with restaurants and retailers struggling).
One particular employee benefit that appears to be ready to explode in popularity is student loan repayment assistance. Once almost exclusively limited to public agencies and non-profits attempting to lure doctors and lawyers into accepting lower salaries to work for them, direct employer student loan repayment assistance – where employers are making payments directly to student loan servicers on employees behalf – is moving into the mainstream.
Currently, between three and four percent of employers nationwide have already rolled out this benefit. But with employers like Staples, Pricewaterhouse Coopers, Fidelity Investments, and Live Nation already offering robust student loan repayment benefits to rank and file employees, we may be on the edge of a preference cascade.
A new survey from employee recruiting, outplacement and executive coaching firm Challenger, Gray and Christmas finds that nearly three out of four employers are considering or planning to offer student loan assistance as an employee benefit.
The companies reporting that they are considering adding the student loan repayment assistance benefit are looking to recruit and retain Millennials with student loans, who are now graduating with an average of over $30,000 in education debt, and entering the work force out of college with monthly payment obligations averaging $280 per month.
““With the average student loan borrower from the class of 2016 facing about $37,172 in debt according to Forbes, – and those with advanced degrees likely have much higher debt – it’s no wonder employers have begun to see this as an
opportunity to recruit young workers,” said Andrew Challenger, vice president of Challenger, Gray & Christmas in a statement.
The survey found that nearly 8 employers in 10 are actively targeting Millennial recruits, with another 56 percent actively looking to target Generation X workers, many of whom also have student loan debt – including debt incurred by college age children for which Generation X parents have co-signed.
72.5 percent of employers surveyed report they plan to implement a student loan repayment assistance plan. 14 percent of them say they plan to do so “soon,” while another 58.5 percent say they intend to offer the benefit but have no definite timeline.
Meanwhile, other studies have repeatedly indicated that Millennials are placing a tremendous value on this benefit. A recent study by American Student Assistance found that 86 percent of Millennials would be willing to commit to an employer for five years if an employer offered assistance with repaying student loans, and 93 percent said they would take advantage of a signing bonus aimed at repaying student loans.
Money committed to a student loan assistance employee benefit would be fully tax-deductible to the employer, but would be taxable to the employee. Legislation is pending in Congress, however, that would make a certain amount of student loan repayment assistance exempt from income taxes to the employee.