Health insurance giant Aetna is the latest major employer to join the growing list of companies to offer student loan repayment assistance as an employee benefit. Beginning in 2017, the company’s 50,000 full-time workers will be eligible for matching student loan payments of up to $2,000 per year, up to a cap of $10,000 per individual. Aetna defines “full-time” workers as those working at least 20 hours per week.
Part time workers will also qualify for the same offer, but with caps of $1,000 per year and $5,000 in total benefits.
If the worker’s monthly student loan payment is less than $167, the company said it will pay the entire student loan payment.
“We believe that these improvements enable us to continue attracting and retaining the best talent,” said the company, according to reporting from the Hartford Courant.
To qualify, the employee must have earned a U.S.-based undergraduate degree from an accredited institution within three years of applying for the program. So for the first round of applicants, those qualified will have received their degrees in December of 2013 or later.
The company estimates about 4,000 employees have received degrees since December 2013 and could be eligible.
A Hartford Courant reporter asked a company spokesperson why the benefit was limited to those who had earned degrees since December 2013, excluding those who graduated earlier and who have student loans of their own to pay off – and who may have more time in service to the company than the recent graduates. The company spokesperson responded that they chose to focus the effort on more recent graduates because they wanted to focus the benefit on those who had the most debt.
However, Aetna’s program isn’t limited to those with current student debt; The program will also extend to employees who go back to school to get a new degree, say company officials.
Payments will be made directly to the loan servicer, as opposed to the employee. Contributions will be tax deductible to Aetna as an ordinary compensation expense, but taxable to employees.
Aetna currently also offers a tuition assistance program to employees that covers 80 percent of tuition costs for graduate or undergraduate courses. Employees can sign up for both programs, says the company.
The announcement comes as total outstanding student loan debt tops $1.3 trillion, nationwide. All told, some 71 percent of college graduates carry at least some form of student loan debt. The average student loan debt at graduation now tops $37,000, and the average monthly student loan payment is now $341 per month (median: $203 per month), according to information from the Federal Reserve Bank of Cleveland. The average student loan payment has increased by 50 percent since 2005.
Aetna’s program is comparable to the student loan repayment assistance in place at Fidelity Investments, which offers qualifying employees up to $2,000 in assistance per year up to $10,000 per person, once they have at least six months on the job. Nearly 6,000 Fidelity workers have signed up for the plan.
Other companies who have recently announced a student loan repayment assistance program as an employee benefit include Pricewaterhouse Coopers.
Currently, about 3 to 4 percent of employers offer student loan repayment assistance, but that number appears to be growing fast, and a number of student loan repayment program vendors, including Tuition.io, are in business right now to fulfill the demand.