There is a new wide spread issue facing the vast majority of employees, especially younger employees who are just entering the job market. While most employers offer standard benefits such as health insurance contributions, dental and vision insurance options, life insurance, vacation time, and 401(k) and other retirement savings options, many employers are realizing they have been failing to address one of their employees’ greatest financial challenges – facing what seems to be the impossible task of repaying all of their student loan debt.
As the severity of this issue has come to light over the past few years, many employers are stepping in to help by offering student loan repayment benefits to their employees. Among the hundreds of employers now offering this benefit include major brands such as Peloton, Fidelity, PricewaterhouseCoopers (PwC), Hewlett-Packard Enterprise, Hulu, Staples, Aetna, Penguin Random House, HP Inc., Estee Lauder Companies Inc., and Live Nation. While this very clearly serves as a huge benefit to the employee, there are also plenty of benefits the employer receives from offering these benefits. There is a lot to know about this important employee benefit, so in this two-part series we will take a look at a few of the many benefits an employer receives by offering student loan repayment benefits to their employees:
Attract Better Talent
As of February 2018, the U.S. unemployment rate was only 4.1% – the lowest it has reached in 18 years. A major challenge plaguing many employers today is how to competitively attract new talent and stand out to new employees entering the job market. Because of this, employers are getting creative in their benefit offerings like offering flexible hours, the ability to work from home, and even sign-on bonuses to competitively attract new talent. The largest generation currently within the job market are millennials, who also have the highest amount of student loan debt, and it is estimated that approximately 75% of the entire workforce will be made up of millennials by the year 2025. Offering student loan repayment benefits could also help employers who are trying to attract a more diverse candidate pool as student loan debt is currently held at a disproportionately higher rate by both women and minority groups. By offering a student loan repayment benefit, employers show prospective employees they care not only about them but also about their future.
Retain Your Best Employees
Today, Americans are leaving their current jobs to go to another one at the highest growing rate since 2001. And while student loan repayment benefits can help attract younger employees into an employer’s company, millennials are not the only ones facing this student loan debt issue. According to the Federal Reserve, 6.8 million people with student loan debt are between the ages of 40 and 49, and on average they owe almost $34,000 in student loans. A recent study conducted by the American Student Assistance (ASA) consumer advocacy group found that 86% of employees would be willing to commit five years to an employer when the employer offered a program to help pay back their student loans and 92% of employees claimed they would take advantage of a program offering to match their student loan repayments much like they are able to do with a 401-(k) match program. Another survey found that approximately 80% of employees who have student loan debt would “value” working for an employer who offered a student loan repayment benefit and 58% of those surveyed were willing to trade a vacation day for their employer to offer a student loan repayment benefit. Memorial Hermann Health System, which is the parent company of 15 hospitals throughout the Houston, TX area, began offering the benefit in 2015 and has since found that the retention rate of nurses who are enrolled in the benefit is 95%, compared to the average retention rate for nurses of 88%. Offering a student loan repayment benefit is a great way to ensure you remain a forerunner in this competitive job market and retain your best talent.
Improve Employee Morale and Productivity
It is no secret that happier employees are more productive employees. But a survey conducted by Willis Towers Watson found that 31% of employees felt their financial concerns affected their work and 74% of employees felt stressed about the amount of their student loan debt and spent time thinking about it while at work on a daily basis. Another survey of more than 500 employees between the ages of 22 and 33 conducted by the ASA found student loan debt negatively impacted employees’ focus and well-being with more than half of those surveyed reporting the worry about the amount of their student loan debt “most or all of the time” and almost 65% claiming they would consider getting a second job just to help repay their student loans. Clearly, employees being this distracted by their student loan debt has an effect on their overall productivity while at work. An employer offering a student loan repayment benefit is able to show their employees they truly care about their overall well-being and are committed to helping them. When employees are receiving a student loan repayment benefit, it reduces the stress and anxiety they feel overall, especially while at work, which in turn improves their overall health, requiring them to take fewer sick days and less time off work, which all equates to greater overall workplace productivity. This benefit also goes hand in hand with the benefit of retaining your best talent, as happy employees also tend to be more loyal employees long-term.