5 rea­sons to of­fer a stu­dent loan re­pay­ment ben­e­fit in 2019

Sure, of­fer­ing the perk will help em­ploy­ers re­cruit and re­tain top tal­ent. But there’s even more ad­van­tages to con­sider.

Employee Benefit News - - Contents - BY ALYSSA SCHAEFER

Sure, of­fer­ing the perk will help em­ploy­ers re­cruit and re­tain top tal­ent. But there’s even more ad­van­tages to con­sider.

With hu­man re­sources man­agers across the coun­try fi­nal­iz­ing their 2019 ben­e­fits pack­ages, many are ask­ing them­selves: How can we add more value for our tal­ent and help the com­pany grow? For many em­ploy­ers, the an­swer is help­ing em­ploy­ees man­age their stu­dent loan debt.

Stu­dent loan debt has reached an as­tro­nom­i­cal sum: There are now 44 mil­lion Amer­i­cans who owe a to­tal of $1.5 tril­lion in stu­dent loan debt, ex­ceed­ing both credit card debt and auto loan debt, ac­cord­ing to the Fed­eral Re­serve. Not only is this an ex­treme amount of debt, but it’s tak­ing an enor­mous emo­tional toll on em­ploy­ees, who are wor­ry­ing more than ever about their fi­nances.

With Amer­i­cans quit­ting their jobs at the fastest rate since 2001, keep­ing em­ploy­ees happy is im­per­a­tive. And part of keep­ing mil­len­ni­als happy is to pro­vide prac­ti­cal ben­e­fits, not just the fun perks. Em­ploy­ees are look­ing to foster mean­ing­ful re­la­tion­ships with their em­ploy­ers — so loop­ing in stu­dent loan re­pay­ment ben­e­fits can pay off for both the em­ployer and the em­ployee.

So what’s to gain for em­ploy­ers? Here are five of the top pay­offs of of­fer­ing a stu­dent loan re­pay­ment ben­e­fit.

1. Re­cruit, re­tain and stand out. In a com­pet­i­tive tal­ent land­scape, stu­dent loan debt re­lief is a mod­ern ben­e­fit that any com­pany can of­fer to in­cen­tivize the younger gen­er­a­tion to join their team. In a re­cent sur­vey con­ducted by Lau­rel Road, we found that 58% of mil­len­ni­als would trade an ad­di­tional va­ca­tion day for stu­dent loan re­pay­ment as­sis­tance, show­ing how valu­able mean­ing­ful ben­e­fits are to this gen­er­a­tion. This ben­e­fit can be a de­cid­ing fac­tor for tal­ent, and a way for em­ploy­ers to at­tract top-per­form­ing tal­ent by of­fer­ing to sup­port their fi­nan­cial fu­tures.

2. It’s flex­i­ble and free. As an em­ployer, you have op­tions to create a stu­dent loan pro­gram that works for your team’s needs and the com­pany’s bot­tom line. A lot of this comes from choos­ing the right lend­ing or re­fi­nanc­ing part­ner that can pro­vide sav­ings to em­ploy­ees. Lenders can of­fer com­pa­nies the op­tion to con­trib­ute or not, and work to tai­lor the pro­gram to the spe­cific needs and in­ter­ests of the com­pany’s work­force — with some op­tions com­ing in at no cost to the em­ployer.

3. Elim­i­nate the stu­dent loan vs. re­tire­ment con­flict. Em­ploy­ees with stu­dent debt of­ten feel deeply con­flicted about whether or not to save for re­tire­ment first or pay off their stu­dent loan debt. A re­cent study from Bos­ton College’s Cen­ter for Re­tire­ment Re­search found that college grad­u­ates with stu­dent debt ac­cu­mu­late 50% less re­tire­ment wealth in their 401(k) by age 30 than those without. Em­ploy­ees shouldn’t have to choose be­tween con­tribut­ing to re­tire­ment and pay­ing off their stu­dent loan debt, as both are nec­es­sary to fi­nan­cial health. The stu­dent loan re­lief ben­e­fit al­lows em­ploy­ees to make a dent in both, re­duc­ing fi­nan­cial stress.

4. Help em­ploy­ees save. One of the rea­sons why the stu­dent loan ben­e­fit is at­trac­tive for em­ploy­ees is the sig­nif­i­cant sav­ings it can lead to. If re­fi­nanc­ing is an op­tion, em­ploy­ees have the po­ten­tial to save thou­sands of dol­lars over the life of their loan through a lower loan in­ter­est rate and lower monthly pay­ments. In the long run, the cu­mu­la­tive sav­ings can add up to sev­eral thou­sand dol­lars or more. Em­ploy­ers should keep in mind that the sav­ings amount will change de­pend­ing on the fi­nanc­ing com­pany you choose to work with. Many can of­fer em­ployer cus­tomers ex­clu­sive rates, which leads to even greater sav­ings. 5. Boost morale and pro­duc­tiv­ity. Ac­cord­ing to con­sult­ing firm Wil­lis Tow­ers Watson, 31% of em­ploy­ees sur­veyed say their money con­cerns af­fect their work. Mean­while, 74% of peo­ple feel stress daily about their stu­dent loan debt and spend time at work think­ing about it, im­pact­ing their over­all pro­duc­tiv­ity in the work­place. So in ad­di­tion to the hard sav­ings em­ploy­ees are earn­ing through these pro­grams, they also are re­warded with the soft ben­e­fits of re­duced stress and anx­i­ety at work.

With stu­dent loan debt reach­ing record highs in re­cent years, em­ploy­ers have rec­og­nized that there’s a cru­cial need to pro­vide em­ploy­ees with op­tions to help them pay down their stu­dent loan debt. And when op­tions like re­fi­nanc­ing come at no cost to them, this ben­e­fit will likely be­come more pop­u­lar. In the fu­ture, we can ex­pect more em­ploy­ers to pave the way for stu­dent loan re­pay­ment pro­grams. Will you be one of the trail­blaz­ers?

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