Millennials are the job-hopping generation. They have been known to move freely from company to company more so than any other generation. Companies have taken notice and are now trying to do something about that. Specifically, they are expanding their employee benefit programs to help reduce student loan debt for their employees, in hopes that this will stem the millennial habit, and buy them some loyalty.
Why now?
Because the unemployment rate is at an all-time low, it has become difficult to find and hire employees, even for entry-level jobs. At the same time, the U.S. now has a collective student loan debt of $1.5 trillion. And student loan debt has a real impact on recruitment, retention and overall employee productivity. Millennials will make up 75 percent of the U.S. labor force by 2025, but they also carry the majority of this debt so they are in an especially prominent position to negotiate what they desire in a workplace. And they are telling employers that they need help with their student loans. An ASA survey of 500 employees ages 22 to 33 highlights how student loan debt negatively impacts their focus, well-being, retirement planning and delays their pursuit of additional education. More than half of the workers surveyed say they worry about student loan debt most or all of the time. These are some of the ASA findings:
- 86 percent of employees would commit to a company for five years if the employer helped pay back their student loans
- 92 percent would take advantage of a match for student loan repayments similar to a 401(k) match.
- 89 percent would use long-term financial planning tools or advice.
- 79 percent would take advantage of free access to a student loan debt counselor.
A low adoption rate
Only 4 percent of U.S. companies are currently offering this student loan repayment benefit. There are a few reasons for this, not the least of which is expense. This is why adoption has mostly been limited to large corporations and small, tech-focused startups that must attract highly skilled millennials. Another detriment is fairness. Paying thousands of dollars more annually to workers with loans and not to their colleagues who don’t have unpaid loans strikes some experts as difficult to justify.
These are some of the drawbacks that help explain the low adoption rate for the loan-repayment benefit, despite a massive marketing push from vendors selling platforms and advisory services to put it into place.
Five companies playing ball
- Aetna
Industry: Insurance
Benefit details: Full-time employees: match up to $2,000 per year, with a $10,000 lifetime maximum. Part-time employees: match up to $1,000 per year, with a $5,000 lifetime maximum. - CommonBond
Industry: Marketplace lending
Benefit details: $1,200 per year, until the loan is paid off. - Estee Lauder
Industry: Skin care and makeup
Benefit details: $100 per month, with a lifetime maximum of $10,000. - Fidelity Investments
Industry: Financial services
Benefit details: $2,000 per year, with a lifetime maximum of $10,000. - LiveNation
Industry: Events promotion
Benefit details: $100 per month, or $1,200 per year, with a lifetime maximum of $6,000.
Takeaway
Forbes has called student loan repayment a “hot” workplace benefit, but it is still a scarce one. Employers say that if the federal government would make these contributions to loan repayment tax-deductible, more of them would do it. In the meantime, those carrying student debt are wise to use all available means to pay down their debt — including refinancing loans, and putting all available extra money toward reducing the principle of your debt. That is, after you have made the minimum contribution to your 401 (k) plan in order to gain the employer match, which is a more common benefit.
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