Original Date: August 27, 2018
My most recent articles have focused on labor and employment laws, regulations and employer obligations, as we see evolution to legislation. To lighten up the content, I am focusing on a new and evolving area of recruiting and retaining talent. Student loan repayment perks and match programs. Organizations across the country, are now offering student loan repayment perks. Countries, states and cities are now offering student loan repayment perks to incentivize younger workers to relocate. I previously wrote about this topic in March of 2016, focusing on the relocation options. These creative perks continue to grow in popularity (the new dental insurance), as the impact of student loan debt ($1.4 Trillion and 44+ million Americans) continues to have a negative impact on future life planning, purchases and retirement. Is this perk right for your organization? I believe it is.
Below are 11 of the perks now being offered by organizations throughout the country:
- “Price Waterhouse Coopers (PwC) launched its Student Loan Paydown program in 2016. Forty-five percent of the firm’s 46,000 junior employees (with six years’ experience or less) signed up to receive up to $1,200 annually for six years. The firm has found that this program has become a contributing factor in the job acceptance rate among applicants.
- Starting this summer, PWC will give employees $100 a month (amounting to $1,200 each year) to help pay down student loans. The company’s offer is good for up to six years. That is a big draw for the company, which recruits 11,000 new employees from college on campuses each year.
- Fidelity’s holistic approach to addressing employee student loan debt includes a Student Loan Repayment Program (SLRP) (that pays $2,000 per year with a $10,000 cap), and financial counseling and education for employees at all career and life stages. In the development of the program, Fidelity leaders often heard employees express regret that they wish they’d known more when they were in high school and making decisions about how to finance their college education. In response, Fidelity Labs, an in-house product incubator, created an online education platform called the Student Debt Tool to help employees better understand their situation and their options. The tool includes a student loan refinancing platform to help consolidate loans to achieve lower lending rates. It also offers tools and advice to help employees save for future college costs for themselves and their children.”[i]
- “Freedom 2 Save program works at Abbott, a research and development company headquartered in Lake Bluff, Ill. Full- and part-time employees who qualify for the company’s 401(k) and are also contributing 2 percent of their eligible pay toward their student loans through payroll deductions receive an amount equivalent to the company’s traditional 5 percent 401(k) match, deposited to their 401(k) accounts. The twist is that program recipients will receive the match without being required to make any 401(k) contributions of their own, allowing them to use more of their earnings to pay off student debt. Abbott’s approach avoids the taxes triggered when an employer directly gives employees funds to help pay off their student loans.”[ii]
- “New York Life recently launched a student-loan repayment program offering up to $10,200 over five years for eligible employees—which tops out at $170 a month.
- Rise Interactive launched its program by offering a loan-repayment contribution of $50 per month.”[iii]
- “Startup lenders CommonBondand LendEDU both pledge to pay off your entire student loan balance, regardless of how much debt you have, if you’re an employee. Common Bond will provide $100 a month and LendEDU $200 a month until your debt is settled. Unfortunately, the odds of being an employee at either company are slim: Common Bond has less than 100 employees and LendEDU has just six.
- Natixis Global Asset Management, the Boston-based division of French investment bank Natixis, rewards loyalty with $5,000 put toward employees’ student loan balance after their five-year work anniversary. They also receive $1,000 a year for the next five years.
- Online homework helper Cheggoffers employees a $1,000 annual contribution, after taxes, toward their student loan balance. It also provides an online student loan management tool to help workers maximize their payments.
- Nevada’s Moonlite Bunny Ranchwill match their employees’ student loan payments 100% for two months. When you consider that employees reportedly make about $3,000 a week at the brothel, the program could work out to be a lucrative offer.”[iv]
- “The American Bankers Association said that next month it would begin helping employees with their college-related debts. The ABA will pay up to $1,200 per year per eligible employee toward student loans, above and beyond salary and any other benefits. The organization, which represents banks that employ more than 2 million people, said it is encouraging each member bank to take a similar step.”[v]
Below are relocation options, currently being offered or being developed:
- “Rural Opportunity Zones consists of 77 counties in Kansas offer tax waivers and or a student loan payment program up to $15,000.
- Niagara Falls, New York is developing a program that could save a student up to $7,000.00 in student loan debt.”[vi]
- Memphis, Tennessee, the first City Government to offer the student loan program.
- “The 20th largest city in the country, Memphis will contribute $50 a month to the student loan account of any employee who’s worked for the city for at least a year.”[vii]
- “Relocating to Saskatchewan, Canada could save a student up to $20,000.00 in student loan debt if you graduated after 2010.
Currently, only 4% of employers are now offering perks outlined above. As the war for talent continues to increase and turnover continues to be a driving concern in organizations, these perks will grow in popularity. Will these perks work for your organization? Maybe or maybe not. However, 44+ million people with student loan debt is a tremendous labor pool. Before implementing a program such as this; benchmark options, know the tax advantages and disadvantages and ask your current workforce. I personally believe there is value in programs such as this and would be happy to work with any organization in implementing a student loan repayment option for the workforce. It will separate you from your competitors.
“On Aug. 17, the IRS made public its Private Letter Ruling (PLR) 201833012, which was issued to the requesting company on May 22. The letter responds to an unnamed employer that proposed amending its 401(k) plan to offer a student-loan benefit program under which it would make special 401(k) contributions into the accounts of employees who are making student loan repayments.”[ix]
– Matthew Burr, HR Consultant
[i] https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/employers-explore-repaying-student-loan-debt.aspx
[ii] https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/401k-twist-on-student-loan-aid.aspx
[iii] https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/launching-student-loan-repayment-benefit.aspx
[iv] http://time.com/money/4261054/employee-student-loan-repayment-programs/
[v] http://time.com/money/4555841/student-loans-employer-benefit/
[vi] “Student Loan Repayment Assistance.” Burr Consulting, LLC Article. March 2016
[vii] http://time.com/money/4810605/memphis-employee-benefit-student-loans/
[viii] “Student Loan Repayment Assistance.” Burr Consulting, LLC Article. March 2016
[ix] https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/IRS-allows-401k-match-for-student-loan-payments.aspx
BURR CONSULTING, LLC 