Latest Recruiting Tool: Offering Student Loan Help
Posted By Marisa Sanfilippo on September 1, 2016 at 5:26 pm
As a way to recruit and retain millennials, an increasing number of employers are taking inspiration from the mountain of debt so many of these individuals owe. Some forward-thinking companies have created a highly sought-after incentive: Offering student loan help to their new employees.
The Society for Human Resource Management’s 2015 Employee Benefits survey notes that only 3 percent of employers offer this perk, but large companies such as Johnson & Johnson are considering it. Among the 3 percent on board are PricewaterhouseCoopers, ServiceCorps, Fidelity Investments, SoFi and CommonBond, just to name a few.
“We make it a priority to listen to our employees, and they were telling us that student debt is an enormous concern,” says Michael Fenlon, chief people officer for PricewaterhouseCoopers. PwC announced the benefit in fall 2015 and piloted it in the company’s Boston office in early 2016. Fenlon adds, “It rolled out to the entire U.S. firm on July 1, 2016. So far, there are 6,300 employees enrolled in the benefit.”
How companies utilize student loan help
According to ServiceCorps, a nonprofit leadership development company, seven in 10 college seniors have an average of $30,000 in debt. Additionally, the amount of debt at graduation has increased 6 percent per year since 2008, and 11 percent of student borrowers are 90 or more days delinquent on their loans. That’s why student loan help is so desirable.
“As far as we are aware, ServiceCorps is the first post-college program and/or employer to pay off 100 percent of college loan repayments through our Debt-Zero Guarantee,” says ServiceCorps founder and CEO Matt Ronen. “This initiative democratizes service by allowing college graduates from diverse socioeconomic backgrounds an equal opportunity to commit to long-term, immersive service. “
Fidelity pays up to $10,000 ($2,000 a year) in its Step Ahead Student Loan Assistance Program through the third-party vendor, Tuition.io. Since the company launched this benefit in January, 6,000 associates have signed up.
“We surveyed our employees about what amount of assistance would really make a difference for them, and that’s how we settled on the $2,000/year figure,” says Jennifer Hanson, head of employee experience and benefits at Fidelity Investments. “The figure has a direct impact on how long it takes [those in debt] to pay off their loans. Employees like the fact that the payment is made directly to the loan servicer. It automates the process and they can see the impact as their balances decline.”
SoFi was one of the first companies in the country to offer this perk, helping its employees pay down $200 worth of student loan debt each month. Other employers also can lean on SoFi to bring financial wellness to their employees through the company’s loan refinancing program.
CommonBond, a student loan help platform, started working with employers last year (Mercer, WeWork, Betterment, Dentons, etc.) and also offers this benefit. Phil DeGisi, chief marketing officer at CommonBond notes that to date the company has partnered with nearly 100 companies helping their employees refinance their student loans.
“From the conversations we have with current and prospective employer partners, we know student loan repayment is becoming an increasingly popular benefit among companies to attract and retain top talent,” he says. “In fact, a recent survey by Willis Towers Watson found that while just 4 percent of companies currently offer a student loan benefit to employees, that number is expected to increase to 26 percent in the next two years.”
Additional companies helping with student loan debt in some form include: Credit Suisse, Martin Health System, ChowNow, and Memorial Hermann.
What student loan help means for businesses
Employers express different motivations behind their willingness to help their young workers. Fidelity believes an engaged workforce helps its company to continue to innovate and deliver best-in-class products and services to its customers.
Third-party companies such as Get Peanut Butter help make the offering of this benefit possible. Its ROI calculator highlights what a Peanut Butter student loan repayment plan could mean for a company’s bottom line. In order to determine this, the calculator requires prospects to enter their industry and the number of employees their company has.
For example, a company in the advertising/public relations industry with 15 employees and a median age of 28 could potentially achieve $100,830 turnover savings if six of its employees enroll. Other benefits include differentiating an employee vs. competitors and helping employees save two years’ worth of loan payments. (Note that the above enrollment estimate is based on the age distribution of the industry, along with corresponding rates of student loan indebtedness.)
Overall, offering student loan debt assistance shows that businesses “care about their employees,” writes College Avenue Student Loans. “Knowing that you are important to the company and being treated as such makes for a happier and more satisfying work experience, which in turn leads to a happier and more satisfying life.”