Student Loan Repayment Programs Gaining Acceptance
Student loan repayment programs are capturing employers’ attention, but the majority don’t seem to be pulling the trigger on implementation. Employers seem reluctant to implement student loan repayment programs to help workers address, and potentially eliminate, their college loans through company-sponsored student loan repayment programs.
According to a recent article in Employee Benefit News, employers are concerned about the growing student debt load being borne by the workforce. All told, about 44 million Americans carry a whopping $1.5 trillion in student loan debt, and that number continues to rise.
At a recent WorldatWork Total Rewards Conference, 80% of HR and benefits professionals in attendance said they don’t offer direct student loan repayment programs to employees, according to EBN. Around 15% said they offer a benefit that helps employees refinance their student loans, and only 3% said they offer direct contributions to help employees repay their college debt.
The survey conducted at the conference closely reflects the reality occurring across American corporations. While many employers seem to understand the appeal of offering student loan repayment programs as benefits for their employees, only 4% of employers currently provide such a program, according to the Society for Human Resource Management (SHRM). Per EBN, it appears employers are still weighing whether student loan repayment programs are right for their workforce, or if such an offering comes at too high a price.
Budgetary concerns are an issue, as is a concern many employers share about student loan repayment programs being unfair to employees who don’t have student loan debt. Do student loan repayment programs indirectly penalize workers who have lived within their means, managed their debt and paid off their college debt. Human resource managers and benefits managers should carefully consider the implications of offering a student loan repayment program before implementing such a benefit. Any decision to offer student loan repayment programs should not be one an employer takes lightly. There are many factors to consider, including employee demographics, the industry in which an organization operates and a company’s financial health.
Companies like Fidelity, Aetna, Penguin Random House, Nvidia, and Staples all offer student loan repayment programs that include either annual or monthly lump sum payments or matching contributions on employees’ student debt payments. Even the federal government offers a student loan repayment program benefit. And the number of employers who offer student loan repayment program benefits is expected to grow in the next five years, according to industry experts. Over half of the HR and benefits professionals surveyed at the WorldatWork conference said that although they do not offer a student loan repayment program benefit currently, they are considering doing so in the future.
Employees have been vocal about wanting help in repaying their student loan debt. Employees are looking to their employers to provide that assistance. Research from Deloitte cited by EBN found that high-performing employers are more than two times more likely to offer some type of student loan benefit. Other research shows that employees are more loyal, and tend to stay longer, if their employer offers a student loan repayment program benefit.
Student loan repayment programs as an employee benefit can be a key differentiator for employers, especially in today’s competitive environment when attracting talent. Employers who want to stand out, attract and retain top talent may consider offering a student loan repayment program, or provide some sort of debt repayment assistance (i.e., offer access to student loan debt refinancing), to gain their competitive advantage. While the jury is still out relative to how prevalent employers’ uptake of student loan repayment benefit programs ultimately will be, it is clear that a portion of a company’s workforce does want and appreciate such a benefit. To that end, student loan repayment programs may be worth a closer look.