It’s been heralded as the most attractive benefit – and the implication is that if your company were to offer it, you would have job seekers lining up at your door. But is student loan assistance a.k.a. student loan repayment really the next greatest thing?
The numbers certainly suggest there is a market for the benefit.
Approximately four in 10 adults ages 18 to 29 have student loan debt, according to Pew Research Center. The median borrower owes $17,000. However, Pew finds the amount varies greatly; one-fourth of borrowers with outstanding debt owe $7,000 or less, while another one-quarter owe $43,000 or more.
Education level accounts for the difference. Borrowers with less than a bachelor’s degree owe a median of $10,000, while bachelor’s degree holders owe a median of $25,000 and those with a postgraduate degree owe a median of $45,000.
As might be expected, student loan debt affects the borrowers. Pew finds that young college graduates with student loans are more likely than those without loans to have a second job and to report struggling financially. In addition, compared with young adults who don’t have student debt, student loan holders are less upbeat about the value of their degree. These findings have implications for employee engagement, retention, and more.
Yet, only 4 percent of 3,227 HR professionals responding to the SHRM 2017 Employee Benefits survey say their company offers student loan repayment assistance. The same percentage of companies provided assistance in 2016, while in 2015, 3 percent offered the benefit.
Why hasn’t the benefit taken off? Tax issues have been one stumbling block; the benefit is considered taxable income and must be processed as such. There are also other issues, including whether to get involved in the loan repayment, by paying the lender/loan servicer directly or contracting with a third party to handle payment processing.
Some companies are navigating these issues, though. Student Loan Hero, a website that assists borrowers, shares a list of companies that offer the benefit.
Nevertheless, a closer look at company offerings may explain why student loan assistance hasn’t gained more traction.
Adding It Up
Here are a few benefits offerings, from the Student Loan Hero list:
- Company will match up to $100 per month of its employees’ student loan payments.
- Company offers employees $500 per year until loans are paid off.
- Company will pay $2,000 per year, and a maximum of $10,000.
Annual benefit amounts generally run from $500 to $2,000, with most companies offering $1,200. How a company provides payment also varies. Some companies pay employees directly, while others handle the loan payment, either directly or by using a third party. There doesn’t appear to be any standard.
At the low end of the scale, student loan assistance doesn’t add up to much; $500 per year is $9.62 per week, $41.67 per month. Meanwhile, the typical assistance, $1,200 per year, is $23.08 per week and $100 per month.
At these rates, an employee – or job seeker – saddled with student loan debt would arguably be better advised to find a job with a higher salary and set up his or her own repayment plan.
Be that as it may, the phrase “student loan assistance” has an allure, and many job seekers seem willing to take the benefit bait. A recent survey conducted by the website Millennial Personal Finance finds that 84 percent of respondents would strongly consider a job offer above others if a potential employer offered a student loan repayment benefit. And that’s not all. A majority of those surveyed, 53 percent, would consider a salary cut if they received a student loan repayment benefit.
|Paula Santonocito, Contributing Editor for Recruiting Daily Advisor, is a business journalist specializing in employment issues. She is the author of more than 1,000 articles on a wide range of human resource and career topics, with an emphasis on recruiting and hiring. Her articles have been featured in many global and domestic publications and information outlets, referenced in academic and legal publications as well as books, and translated into several languages.|