Student Loan Assistance in 401k Plans: Hype or HR Advantage? More employers are offering student loan assistance on their benefits menu in an effort to recruit and retain talent, especially younger workers. In fact, according to a recent article from CNBC, employer help to pay down student loans could soon become as common in the workplace as 401(k)s.
Fidelity began offering a solution for employers to assist their workforce with student loan debt this year. More than two dozen companies have signed up so far, and Fidelity predicts that figure will double by year-end.
Seven out of 10 individuals graduate college with student loan debt, according to the CNBC article. The average amount of that debt is $30,000; nearly 20% owe more than $100,000. In fact, student loan debt impacts more Americans than auto loan or credit card debt.
Student loan assistance is an attractive benefit for prospective hires. Nearly 90% of workers said they would commit to an employer for at least five years if they were offered assistance with their student loans, according to research from the nonprofit, American Student Assistance, cited by CNBC.
Employees are enthusiastically embracing student loan assistance programs at companies where they’re offered. What’s more, employers are excited about it, too. Student loan assistance programs are a hot topic at job fairs, and one employer quoted by CNBC said such programs are as meaningful to recent college graduates as 401(k)s.
On the flip side, there are critics of employer-sponsored student loan assistance programs. Student loan debt in America is a $1.5 trillion problem, and skeptics are not convinced that employers can help fix it. Some opponents propose a universal solution that brings down the cost of tuition overall. One issue, they say, is that a small number of employers offer student loan assistance benefits, and it’s likely to remain that way. Just 4% of employers currently offer student loan help, according to the Society for Human Resource Management (SHRM), again, cited by CNBC. As such, their opponents believe these programs won’t make a significant enough dent in the student loan debt load to be worth their while.
That said, student loan assistance could be a big win for employers, enabling them to bolster recruiting efforts by offering a new, off-the-beaten-path benefit, and engender employee loyalty for the long haul, thus reducing turnover and staffing costs. It remains to be seen whether student loan assistance programs catch on in a big way among employers, but given its positive attributes, it’s a benefit worth paying attention to.
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