Think student loan repayment is a topic best left to politicians? Think again.
In the last several years, human resources professionals have been at the forefront of a shift in employee benefits. Employee development has taken priority as the driving force for employee engagement – but the truth is that we cannot focus on our employees’ future development while their pasts continue to weigh them down.
There are nearly 45 million Americans with student loan debt – and your employees are among them. The rising cost of high-education is also putting a burden on the next generation of the American workforce and is setting them back before they have the chance to get ahead.
Creating a student loan repayment program can not only attract new talent to your company but also it will aid your current employees who are burdened with student loan debt.
What is a student loan repayment program?
A corporate student loan repayment program is a process by which an employer offers tuition payment assistance to employees for existing student loan debt. This is different than a tuition reimbursement program which offers repayment to employees seeking to complete a new degree.
Only 4 percent of employers offer student loan repayment programs to their employees. As HR professionals, we are in the unique position to offer employees a solution to the student loan crisis.
3 reasons you should offer student loan repayment
The problem many employers have with offering student loan repayment is the thought that it isn’t their job. True, the trend of offering to repay student loans is a new concept but it’s a direct product of a growing problem facing the American workforce.
As our economy continues to evolve and employees face new challenges, it’s our job as employers to answer. We are standing on the edge of a cliff created by the student loan crisis and while ignoring it might not directly impact your company, it will contribute to the growing problem. The good news is that student loan repayment offers mutual benefits to both employee and employer.
1. It affects more of your employees than you think
The conversation around the student loan crisis has focused primarily on Millennials and Gen Z, but the truth surrounding who actually owes money is more complicated. A study from the New York Federal Reserve claims that, while borrowers under the age of 40 have the most student loan debt, about 5 percent of student loan debt belongs to people over the age of 60.
Another thing to consider? Many parents are helping their children pay off their student loan debt or have even taken out loans for their children in their own names. One in three parents are helping their children pay off their student loans.
That means you may have employees that are trying to plan for both retirement and paying off their loans or the loans of their children. The burden that student loans have on the workforce is not regulated to the young, it affects your employees in each stage of their life and career.
2. It boosts employee morale and productivity
It’s no secret that student loans can add unneeded stress to your employees. And while that might not seem like your problem on the surface, it can affect your company in the long-run.
Employees that feel financially burdened may be tempted to leave a company for one that promises a higher salary or better training and development opportunities. When your employees are worried about paying back their mounting student debt, they may leave to find an employer who is willing to give them the tools and monetary compensation they need.
Not only that, but employees that are stressed out by their personal life are more likely to be disengaged at work. By offering to help alleviate the stress of student loan repayment, you are offering your employees a solution to their problem. They will likely be more invested in your company and that in turn will boost their morale and productivity.
3. It will help attract and retain high-level talent
The student loan crisis is growing each day and as a result, it’s affecting the next generation of young talent. As the job market becomes more competitive companies are turning to more creative employee benefit options to attract new talent.
The same study from the New York Federal Reserve noted that the highest percentage of student loan debt is held by people under the age of 40, with more than 30 percent being held by people under the age of 30.
These individuals are overwhelmingly more likely to accept a position with a company that offers student loan repayment. Just how tempting is the promise of student loan repayment?
According to an article from Fast Company, 80% of participants with debt said they wanted to work for a company that offered repayment assistance and 85% would accept a job offer when student loan repayment is included.
Offering student loan repayment will not only benefit your current employees, but it will also help you attract the talent that might otherwise go to your competitors. If you’re looking to stay one step ahead of the competition, you should consider offering student loan repayment.
Lauren is a Content Marketing Manager at G2. You can find her work featured on CNBC, Yahoo Finance, and on the G2 Learning Hub. In her free time, Lauren enjoys watching true crime shows and spending time in the Chicago karaoke scene. (she/her/hers)