Would You Like Your Employer to Pay Off Your Student Loans?
Posted February 9, 2016
Since World War II, subsidized health insurance has been one of those unquestioned work benefits. We’ve come to expect it, just like the 8-hour workday.
Of course, many Americans don’t get health coverage at their jobs, and they work more than 8 hours a day to make ends meet. That might help explain why today’s young workers want a brand-new benefit: help with their student loans. "Job seekers are looking for more unique employee benefits packages that can keep pace with modern financial concerns," says the company Beyond, The Career Network. "The prospect of ‘student loan reimbursement’ has emerged as a highly-desired offering."
Beyond’s conclusion comes from a national survey of 5,000 job seekers and revealed "89 percent believe companies should offer student loan repayment as part of the benefits package." Most surprising, though, was "10 percent ranked student loan repayment higher than paid vacation as the ‘most important’ benefit."
This doesn’t surprise Howard Dvorkin, CPA and chairman of Debt.com, who often writes about student loans, he is only surprised that it took this long to become an issue. "As more millennials graduate and enter the workforce, they’ll clamor for this, but the real tipping point will be when those millennials become managers and actually have influence over the benefits packages their businesses offer" says Dvorkin.
That makes sense, since student loans are now the second largest form of personal debt in America and is only exceed by mortgage debt. We’re talking $1.2 trillion that Americans owe on their student loans. All the credit card debt in this country is a distant third at $712 billion. Those numbers are so overwhelming, the federal government launched a half-dozen student loan consolidation and forgiveness programs to help graduates wrangle their debts.
"As millennials become the boss, they’ll understand what it takes to lure the best of their generation to their companies. So expect to see ‘student loan payment assistance’ on the list of company benefits, possibly within the next few years," continued Dvorkin. Not only would this perk lure younger talent, it might keep them around longer.
I can foresee this benefit having employers paying a certain amount towards student loan debt the longer they are employed with a company, much like how paid vacation operates now. So perhaps the first year, they would earn only a nominal amount, but by the fifth year, they could accrue thousands of dollars to pay towards their student debt.
Besides, some employers already offer student loan perks like paying for related classes or degrees. This benefit would just be an extension of that.
Before you scoff at the idea, consider this. As the economy improves, the job market will quickly tighten for employers who had their pick of the litter since the Great Recession. It could become a "buyer’s market" as bosses start losing their best, brightest and youngest not over just salary, but a crucial benefit like student loan assistance.
And besides, what better way to keep valuable employees around than by picking up their student loan payments. The survey seemed to support that point when it found 81 percent claiming that they would be more willing to stay with the company if leaving meant losing student loan repayment. Now that is a win-win.