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.
Nearly 45 million Americans have student loan debt—and your employees are among them. The rising cost of higher education is also burdening the next generation of the American workforce and setting them back before they have the chance to get ahead.
Creating a student loan repayment program can attract new talent to your company and aid your current employees who are burdened with student loan debt.
A corporate student loan repayment program is a process by which an employer offers tuition payment assistance to employees with existing student loan debt. This is different from 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 a unique position to offer employees a solution to the student loan crisis.
Many employers have a problem with offering student loan repayment because they think 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 employees and employers.
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 is helping their children pay off their student loans.
That means you may have employees who are trying to plan for retirement and pay 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 lives and careers.
It’s no secret that student loans can add unneeded stress to your employees. While that might not seem like your problem on the surface, it can affect your company in the long run.
Employees who 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.
Tip: Learn more about the causes of employee turnover and how you can prevent it.
Not only that, but employees who are stressed out by their personal lives 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 problems. They will likely be more invested in your company, and that, in turn, will boost their morale and productivity.
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.
Tip: Learn more about how to recruit Millennials and Gen Z talent.
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 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.
As employers, change can start with us by offering our employees tuition reimbursement and student loan forgiveness programs.
Nobody should be held back from reaching their full potential due to a lack of funds for higher education. Something needs to change, and we, as HR Professionals and managers, can be the start of it.
HR Managers, interested in reading more? Learn why offering tuition reimbursement to your employees is vital to your employee benefits program.
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