Americans owe more in student loans than ever before. According to a recent study, about 44 million borrowers owe more $1.48 trillion in student loan debt. Because of this high debt, it was recently found that 78 percent of workers with student loan debt would like their employer to offer a repayment benefit. And some–4 percent–employers are doing just that.
The reason? “For U.S. companies trying to lure and retain workers now that unemployment is near an 18-year low, student loan repayment programs offer a way to specifically target millennial workers who are saddled with student debt,” Reuters reported.
Less stressed-out workers make for better employees. “One in three employees cite money concerns as a major distraction at work, driving real productivity concerns for employers,” HR Drive reported.
Corporate student-loan repayment programs also makes for a more diverse staff. “The programs also offer a way for companies to broaden their recruiting pool: Student debt is disproportionately held by women and people of color, making companies that offer these benefits appealing to more diverse applicants,” Reuters reported.
Here’s how it works: Employers make a regular contribution to the employee’s loan balance, usually about $100 a month. Employees continue to make their regular payments.
“On a $26,500 student loan with 4 percent interest, employer help of $100 a month could cut down the length of a 10-year loan by about 3 years, saving employees around $10,000, according to a study commission by Gradifi, which offers third-party administration for loan repayment programs,” Reuters reported.
Gradifi is one of the companies that helps organize these programs at corporations. It currently has more than 300 corporate clients, up from 50 in 2016. It offers benefits to about 9,000 eligible employees.
One company using Gradifi is indoor cycling company Peloton. Offering this benefit to employees “was a complete no-brainer,” said Amy Stoldt, the company’s vice president of Peloton. “For full-time employees with student loans, it pays $100 a month to the loan’s balance. Right away, more than 10 percent of the company’s workforce signed up,” Reuters reported.” Today, about 20 percent of their 719 full-time employees participate across different departments, including retail, instruction, tech, marketing and their bike delivery team.”
Bottom line, such programs are good for business. “Generally, more employers are investing in employees’ financial well-being, which can reverse decreases in productivity, ease workers’ worries and stress, and curb healthcare costs associated with stress. Employers, in turn, gain a much-in-demand benefit option that can attract talent and increase retention rates, especially in a tight labor market,” HR Drive reported.
The latest addition to competitive #EmployeeBenefits packages: paying off student loan debt. https://t.co/BRFoUxbwMf
— Keenan (@KeenanAssoc) June 5, 2018
