Companies help millennial employees pay off student debt
While 401(K) contributions have traditionally been a benefit companies used to lure talented employees, innovative companies are beginning to offer a new benefit that their millennial employees need even more: help paying their student loans.
A recent article in The Hechinger Report discussed the rise of employee benefit programs aimed at helping employees pay student debt.
Student loan repayment benefit programs on the rise
With 42% of millennials carrying student loans, and student debt balances rising rapidly, many young employees simply can’t afford to worry about retirement savings, which makes traditional benefits like a 401(K) less enticing.
But they’re definitely worried about student loans–and companies are increasingly recognizing this need and realizing they can use student loan assistance to lure young talent.
And CommonBond, a student loan refinancing and consolidation company, offers up to $100 per month, or $1,200 per year, towards employees’ student loan payments.
According to Forbes, other companies that help pay their employees’ student loans include:
- Powertex, a design company, offers employees up to $100 per month for up to six years.
- NVidia, a visual computing technology company, offers up to $500 per month, or $6,000 per year, with a limit of $30,000 total.
- Aetna, one of the nation’s largest health insurance companies, will match up to $2,000 per year for full-time employees, with a limit of $10,000 total.
- Fidelity Investments, a financial services company, offers $2,000 per year to employees after six months of employment, with a limit of $10,000 total.
- SoFi, a loan refinancing company, offers employees $200 per month.
- Natixis Global Asset Management, an investment firm group offers $1,000 per year upon beginning employment, with a $10,000 limit.
- LendEDU, a student loan refinancing and consolidation company, offers up to $200 per month, or $2,400 per year.
- Chegg, a textbook rental company, offers employees $1,000 per year.
- ChowNow, an online food ordering system and app company, offers an employer match to employee student loan contributions of up to $500 per year.
- Kronos, a workforce management software company, offers employees $500 per year.
- Gradifi, a student loan payment platform, offers $250 per month, up to $10,000 total.
While it’s still pretty rare for a company to offer these benefits (only about 3% of American workers currently have access to such programs), that number is rising rapidly, the Society for Human Resource Management says.
As Bruce Elliott, the society’s director, puts it,
This is the future.
Employers that don’t listen to this generation do it at their own risk.
Benefit could save borrowers thousands on repayment
We think it’s great that employers are increasingly realizing the financial burden of student loans, particularly on their younger employees, and that they’re taking proactive steps to address it.
According to NerdWallet, this benefit could help employees take three years off the lives of their loans and save $4,100 in interest.
It can also help make recent graduates more confident about saving for retirement making larger purchases such as a car or a house, or getting married–all of which more millennials are putting off due to student debt.
Keep in mind that unlike a 401(K) or tuition reimbursement plan, these programs aren’t yet tax deductible for employers, so it’s possible that your employer may deduct the tax directly from the payment or your paycheck, or you may be responsible for it when you file your tax return each year.
If your company offers a student loan reimbursement plan, it’s important to talk to your payroll office to make sure you know all of the details and implications.
More ways to reduce student debt
While these employer contributions certainly help, borrowers may be able to save even more money and reduce their monthly payments by refinancing their student loans, which can lower their interest rate significantly.
Even with employer help, repaying your student loans can be a struggle, and it’s easy to fall behind on payments.
We help student loan borrowers get on the best repayment plan for their situation, lower their monthly payments and save money repaying their student loans.
If you’d like to learn how we can help you, call us toll-free at 1-888-234-3907 or contact us for a free consultation.