Student Loan Repayment Becoming Part of Some Employee Compensation Packages

Posted By Donna Fuscaldo on September 25, 2015 at 11:09 am
Student Loan Repayment Becoming Part of Some Employee Compensation Packages

Nobody wants to take out hundreds of thousands in loans for a law degree, only to make $35,000 a year in the public sector. Loan Repayment Assistance Programs (LRAPs) offered by colleges, employers and government agencies can ease the pain.

Competition is fierce for graduates with sought-after skills, whether its nurses, pharmacists or attorneys. And that means some companies are willing to go to great lengths to recruit and retain them.

With student loan debt hovering at around $34,000 for the average graduate, helping employees pay off some of that burden is emerging as an effective recruitment tool.  Known as employer-based loan repayment assistant programs, or LRAP, companies, schools and organizations give workers or alumni a stipend to go toward paying off their student loan debt. The money is counted as taxable income, and the amount can differ from one employer to the next.

Healthcare system lures recruits with LRA

At Martin Health System, a Stuart, Florida healthcare system that is comprised of three hospitals, one medicenter, a free standing ER center and a number of outpatients and clinics, loan repayment assistance programs have been a part of the recruitment strategy for more than ten years. Martin Health System offers an LRAP for nurses, pharmacists and physical and occupational therapists. Each group is eligible for a different amount of money based on the education requirements for the positions. Nurses, for instance, get $2,000 a year for up to four years, while therapists are eligible for $3,000 and pharmacists receive $4,000.

“The primary reason we do it is as a recruitment incentive,” says Debbie Perez, assistant vice president at Martin Health System. “Nurses, pharmacists and therapists are all in high-demand, and historically, this type of incentive helps make the decision to join our organization.”

LRAP targets professions where there is a need

LRAP programs vary when it comes to who they target and what they offer, although most programs tend to focus on professions where there is a need to recruit workers. In addition to healthcare, these programs are common in places that hire teachers and lawyers. According to Heather Jarvis, a student loan expert, in addition to employers, universities also offer these programs to their alumni and employees, as well some government agencies. “People working in public service will be paid less than in the private sector, so there might be a program in a prosecutor’s office,” says Jarvis. “It might be a program operated by a law school to help graduates who do public service.”

Jarvis says that LRAPs are very popular among law schools, with at least half offering some sort of aid to graduates. The schools with the largest endowments, like Harvard University, Yale University and New York University, are likely to have the best funding, she says.

Attorneys can get LRAP help in a host of ways

According to Isaac Bowers, director of law school engagement and advocacy at Equal Justice Works, a Washington D.C.-based non-profit focused on mobilizing the next generation of lawyers, LRAPs are common within the legal field. Not surprising, since lawyers typically graduate with student debt in excess of $100,000. And, just like in the healthcare field, Bowers says the programs are driven by a need to recruit – and, more importantly, keep – these workers in areas that have a lot of voids to be filled. “There is a vast need for public defenders and prosecutors across the country,” says Brown. “They are under-paid compared to the private sector, and it’s hard to get them to commit to long term jobs.” Brown says that similarly, doctors who agree to work in rural areas where they will get paid less can find LRAP programs.

Supporters of LRAPs say one of the problems with them is the fact that many people aren’t aware of them or don’t understand how they work. As a result, they don’t take advantage of the available funding, which in some cases can be generous. While a $2,000 yearly stipend isn’t going to reduce a $100,000 student loan debt bill by much, a $5,000 a year one for four years can. And at the end of the day, every penny helps. If a graduate’s aim is to work with the public as a teacher or lawyer anyway, then it’s a win/win situation. Experts say professionals can find available LRAPs online, through colleges and universities as well as industry associations.  Equal Justice Works has a list of law school LRAPs on its website.

Private sector isn’t likely to jump on board

While LRAPs have been around for years, the private sector has been slow to get on board. Some hospitals like Martin Health System do offer LRAP programs, but those examples are few and far between. One of the reasons, says Jarvis, is that the repayment help isn’t tax-free. Companies figure that it’s easier to just pay a higher salary instead of giving an employee a stipend that adds to their income anyway.  “What companies have done traditionally is to pay salaries that enable people to manage their loans,” says Jarvis. “You are much more likely to see programs in areas where salaries for whatever reason don’t keep pace.”

Donna Fuscaldo
Donna Fuscaldo is a freelance journalist hailing out of Long Island, New York. She has also written for,,,, Business Insider, Dow Jones Newswires and the Wall Street Journal.

You May Also Like