The average college student graduates with tens of thousands of dollars in student loans. Student loan debt in the U.S. has now topped $1 trillion. Yet many college graduates are not getting the jobs that gives them the means to pay back their loans, cover living expenses and save for the future.
In PayScale’s latest College ROI Report, we evaluated the costs for 1,461 higher education institutions and the earnings for their graduates. We found that 39 percent of schools (564 schools) reported that the average student graduate has a loan of over $30,000.
Six percent of the schools (92 schools) report that the average student has over $40K in debt. Nine schools reported their average student graduates with over $50K in debt.
Student loan payments are a big reason millennials are struggling to save enough to buy a house, build a rainy-day fund, or even consider investing in retirement. Paying off a portion of their debt would make an immediate impact to millennials’ quality of life. A survey from fintech company IonTuition found that 80 percent of workers with student loans said they would like to work for a company that provides a student loan repayment benefit.
A different survey conducted by Fractl showed 2,000 U.S. workers a list of 17 benefits, and asked them how heavily they would weigh the options when deciding between a high-paying job and a lower-paying job with more perks.
Student loan and tuition assistance ranked highly on the list of benefits, with just under half of respondents reporting that these benefits could nudge them toward a lower-paying job.
What is Student Loans Repayment Assistance?
Providing assistance by paying off your workers’ student loans is a still an emerging employee benefit. A 2017 benefit survey from SHRM found that only 4 percent of organizations provide a student loan repayment benefit.
This benefit can come in a few flavors, but the most basic version involves the company contributing a certain dollar amount per month or year toward paying off an employee’s student loans. Some will have an annual cap on the amount and a maximum lifetime amount. Others do not. Given that 71 percent of college graduates have some amount of student debt, this benefit can be incredibly meaningful to millennials and recent graduates.
Companies that Provide this benefit
Here’s a sample of companies that provide student loan repayment and/or tuition assistance, and what they’ve said about why they choose to provide this benefit.
Aetna
It’s not surprising that healthcare company aetna would provide this benefit. Aetna stated that this new benefit is aligned with their “overall vision of building a healthier world”. Aetna’s website said: “Aetna takes a holistic view of employee well-being — one that includes physical, mental, social and financial health. These programs help make our employees healthier, happier and more productive; improve the experience we provide to our customers; and make our company stronger.”
Their student loan repayment program matches part-time employee student loan payments up to $1,000 per per year with a lifetime maximum of $5000. For full-time employees, Aetna matches student loan payments up to $2,000 per year with a lifetime maximum of $10,000.
Other companies offering this benefit, including Chegg (textbook rental and tutoring company) and Penguin Random House, echoed the idea that giving employees this benefit is about the organization living up to its mission and values.
CommonBond, a company that helps people refinance their student loans, also helps its own employees pay off their student loans. They’ve chosen to provide the benefit to its full-time employees for as long as it takes to pay off their loan, rather than setting a lifetime cap.
According to one of their employees, Dave Carter, thanks to this benefit, he is set to pay off his student loans almost one year earlier than planned. In an interview with StudentLoanHero, Dave acknowledged that this benefit has “had a tremendous effect on [his] overall stress levels and allows [him] to focus more on the task at hand.”
Additionally, Dave says that he’s now more loyal to CommonBond “because the company recognizes and is addressing a major financial issue in [his] life.”
Other companies have taken additional steps to invest in employee’s professional development. For example, Fidelity Investment also offers tuition reimbursements to employees who’ve worked for the firm for at least six months and then enroll in work-related courses or degree or certification programs. This reimbursement covers 90 percent of certain costs with a maximum of $10,000 annually.
The most ambitious companies are addressing the issue of student debt at its root.
Starbucks has created a College Achievement Plan in collaboration with Arizona State University (ASU). Every all part-time and full-time Starbucks partner (employee) can receive full tuition coverage to earn a bachelor’s degree through ASU, with all coursework delivered online. On its website, Starbucks says its College Achievement Plan is: “just one way [it is] committed to the success of [its partners].”
The next bit is a very compelling recruiting pitch — which is aimed simultaneously at young workers (who may start out as baristas in Starbucks stores) and anyone who aspires to grow in their career: “From growing as a person, as a partner, in your career and in your community — the opportunity is here for you to shape and make your own.”
Considerations For Your Organization
If you are thinking about providing student loan repayment assistance as a benefit, these are the questions you’ll want to answer to ensure that the program achieves the intended results.
- What are the reasons for doing this? Can you connect providing this benefit back to your company values, mission and vision?
Whether you’re thinking about student loans repayment assistance, a new policy on parental leave, or spending $50K to host a company-wide party, you’ll want to connect the dots between what you want to do and the expected results.
Think through: how does providing this benefit help your employees and your business? While doing right by your employees, does this solution address a business issue such as retaining key talent? By doing X, what sort of message does this send about your company culture and values?
- Is student debt a major financial concern for your talent pool?
Do you have a significant portion of employees who would take advantage of this benefit? Would your workforce value this benefit more than other benefits?
Tip: No matter how much you think your employees love a particular benefit, remember to talk about your compensation and benefits as a total package.
Young workers care about compensation and benefits, but they also care a lot about having the opportunities to learn and grow. They’re assessing whether your organization can provide them with opportunities to gain new skills that will lead to higher-paying jobs down the road.
When making an offer, give the candidate the big picture. Talk about the overall mission of the organization, the company goals, the opportunities they will have at your firm to grow, and help candidates understand how your company goals manifest in the compensation and benefits package.
- Does your specific program help you with your retention goals?
For example, do you want to pay off a portion of an employee’s student loans every month, quarterly, or annually? How long would employees need to have been with your organization for them to be eligible?
Would you rather continue to offer this benefit to the employee for as long as it takes for them to pay off their loans, or do you set a cap on the total amount you’re willing to pay per person?
Tell us what you think
Does your organization provide student loans repayment? If so, tell us what impact it’s had on your employees and your organization.
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