Thinking about student loan benefits? 3 reasons why now is the time to get started
With student loan repayment set to resume, the time is now to offer a benefits program that can help offset the impact of student debts.
As the Great Resignation enters its second year and employers race to overhaul their recruitment and retention strategies, voluntary benefits are having a moment.
But these perks were already a mainstay in 9 out of 10 workplaces long before this record period of turnover began — a figure that makes it clear to see that offering voluntary benefits alone isn’t enough to make employees want to stay.
In order for voluntary benefits to be most effective, they must be broad enough to engage at scale, but specific enough to make employees feel seen on an individual level. But with potential offerings ranging from fitness classes to meal kit subscriptions to “pup-ternity” leave, pinpointing a perk that’s truly up to the task can feel daunting.
Enter student loan benefits. One-third of the US workforce is actively preparing to pay for college, taking out student loans, or paying off the resulting debt, creating an opportunity for employers to respond to one of the most prevalent — yet personal — financial wellness concerns in the workplace.
And what’s more, there’s never been a better time for employers to get started — here’s why:
Student loan benefits align with employees’ values
Alignment of personal and corporate values has become an increasingly common employee demand over the last two years. And that trend is playing a significant role in the Great Resignation: more than half of professionals say they’d quit their job if their employer’s values did not align with their own, and a quarter would reject a job offer.
So how do student loan benefits connect with some of employees’ most commonly shared values? The benefit promotes diversity, equity, and inclusion — workplace values sought by 80% of professionals — by addressing a financial burden that perpetuates social inequities experienced by and disproportionately impacts women and people of color. With three-quarters of job seekers ranking an employer’s stance on work-life balance as a key consideration when evaluating a job offer, student loan benefits relieve a financial stressor that equally hinders employees’ ability to engage at work and flourish at home.
Policy milestones are brewing the perfect storm
After over two years of emergency suspension, federal student loan repayment is set to resume this fall. But this won’t be a welcome change, as 93% of borrowers say they aren’t ready to start paying their monthly debt bill again and two in three say they’ve been using the extra cash to cover essential expenses like rent, childcare, and groceries.
At the same time, legislators are creating pathways for employers to play a more active role in helping employees with student debt build financial health. When passed, the highly-anticipated Secure Act 2.0 will allow employers to match the amount an employee contributes to their student debt payoff as a tax-advantaged contribution to the employee’s retirement plan. In doing so, the legislation will open a new door to financial health for the 7.5 million employees whose student debt keeps their employer’s retirement plan benefit out of reach — and open the door to new incentives for employers who implement student loan benefits.
Budget doesn’t have to be a barrier — with the right program design
To be sure, directly contributing to employees’ student debt repayment or matching their monthly payment with a retirement contribution is a direct path to maximum impact. But if cost is a barrier to implementing such a benefit, consider how your program design could be tailored to stay within budget.
Self-selection is an increasingly common strategy to implement a student loan benefit without the need for a bigger budget. Under this model, the employer determines a per-employee wellness budget and allows employees to direct it to pre-approved services of their choosing — and in doing so, demonstrates a commitment to employees’ wellbeing on an even more personal level.
Tiered eligibility can also be helpful for the spend-conscious. By restricting eligibility for sponsored contributions to specific cohorts such as those who meet an employment length or salary grade threshold, HR leaders can measure their return on this limited investment and build the case to expand the benefit as funding becomes available over time. That’s not to mention the dozens of other student loan solutions that can help move the needle at a lower cost than employer-sponsored contributions. By offering solutions that address the full student loan experience beyond just repayment — such as tools that promote financial literacy, help employees find private lenders, or enroll in federal loan forgiveness programs — employers can reach even more employees across every population.
The time is now
With student loan repayment set to resume in the future, the time is now to offer a benefits program that can help offset the impact of student debts. With the right program, companies will not only benefit borrowers in the workforce but also improve their ability to attract and retain talent amid increasing competition and uncertainty in the job market.
