As student loan debt reaches crisis levels in 2018, the average graduate copes with $37,172 in debt, and employers have begun to understand what this means for them as they attract top talent. Student loan repayment might become the workplace benefit of the future.
Importance of Education
As more companies place an importance on education, students take out more student loans to attend college. Getting a degree formalizes your skills, shows your dedication to accomplishing a long-term goal and demonstrates you are willing to invest financially to achieve something. Employers recognize the importance of a degree and are willing to pay someone more for obtaining one. Massive debt loans for individuals are a concern for younger generations, and employers want to help alleviate student loan repayment concerns to help employees achieve financial freedom.
Repayment Replacing Retirement
Student loan repayment could replace 401(k) and retirement accounts as a major financial perk. Alleviating student debt faster can improve credit ratings for workers while allowing them to put aside more money for investments on their own without relying on employer-based 401(k) programs. Unlike previous generations, many millennials feel that repaying student loans is more important than home ownership and saving for retirement. Employers who offer this benefit show right away that they care about their employees' financial future. Repaying a student loan comes to fruition sooner than taking advantage of retirement — another reason why millennials may value this benefit more than others.
How Student Loan Repayment Programs Work
Employees typically receive this workplace benefit on top of a monthly salary, and it ranges anywhere from $50 to $100 per month. Statistics show this amount can help repay student loans two to three years faster than employees would without the benefit. Even if your employer cannot offer a student loan repayment option, companies may have programs that offer to refinance student loans to make monthly payments less expensive.
For example, Ernst & Young started its student loan refinancing program in 2014 as a way to attract top accountants to the vaunted firm. In 2017, just 4 percent of companies provided this type of benefit despite surveys showing that repaying student loans was a huge concern for millennials entering the workplace. As many as 95 percent of workers under 30 say they would accept a job that offers repaying student loans as a benefit.
Why This Benefit Works
Employers offer to repay student loans to draw top talent right out of college. This benefit also helps workers become more productive and knowing that firms have this benefit encourages people to attend college to try to advance their careers. As more people attend college, companies fill more positions, improving their bottom lines.
Student loan repayment gives employees confidence that their company has their backs. Not only does this benefit show goodwill toward new workers, but it also gives them peace of mind. Have you ever worked for a company that offered student loan repayment as part of its benefit package?
Photo courtesy of Piedmont Virginia Community College at Flickr.com