Student loan assistance programs work in two ways. Employers can send monthly payments directly to their team members’ lenders or match employee contributions to pay off the debt faster.

People with student loan debt experience stress and anxiety because the monthly payments are so high. Covering or matching those contributions could alleviate those mental health challenges. When your workplace has more people who feel at ease and less anxious, the environment can become extra productive and retention rates may improve company-wide because employees feel psychologically supported.

Companies also stand to benefit financially from implementing a program like this. The IRS allows employers to pay up to $5,250 per employee in student loan assistance programs annually. Each contribution counts as a business tax deduction, so your company could save a substantial amount of money on its annual taxes if you have multiple staff members who take advantage of this perk.

You should prepare for the potential challenges of adding a student loan assistance program to your workplace. Some employees may have paid off their higher education debt or covered their tuition through scholarships and grants. Resentment may occur when some employees can’t participate in a new benefits program.

There’s also a timeline involved in implementing student loan assistance benefits. You’ll need to discuss if your program will require an employee commitment, like working for the company for at least a year before this benefit begins. Setting monthly assistance caps is crucial. Increasing company loan payments with annual raises could incentivize employees if it’s within your team’s financial capabilities.

Real-world successes of college debt repayment benefits

Many large companies have already started student loan assistance programs as employee benefits, so HR professionals and employers can learn from their experiences. Fidelity was one of the most notable brands that began college loan assistance in 2016 to assist the 25% of its workforce with student debt. Employee satisfaction increased so much that the company doubled what employees saved for retirement through a secondary college debt repayment program.

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Chegg also paved the way for student loan assistance programs. The company started its program in 2019 and made it an income-based benefit, so lower-level employees gained the most from participating. Higher-ups like directors and VPs could still receive this benefit, but the human resources department gave them $2,000 less annually because their salaries were higher. The result was a resounding success, given the company’s 86% retention rate and high employee satisfaction.

Smaller companies may struggle to recreate the same outcomes right away. You must devote more revenue toward the new student loan repayment program and existing employee benefits. Monthly assistance may start small but can grow alongside your business. Many real-world success stories are from national corporations, so expect slightly more financial challenges if your company is still in the early growth phases.

The effort may be worth it for benefits teams and employers. Addressing the loan-related stress of your new hires and current employees could boost retention and productivity. More young people with student loans may also apply for your open positions before considering your competitors that don’t offer a similar program. The advantages are worth weighing as you decide how to reshape your benefits packages to address the needs of the modern workforce.