Should You Repay Your Employees’ Student Loans?
A growing trend in the financial and consulting sectors could become as valuable to college grads as the 401(k): In an effort to keep talented employees happy, some employers are paying a significant chunk of their workers' student loans.
In terms of trendy benefits in the human resources space, it’s not nearly as offbeat as allowing pets in the office, though it’s definitely a lot more expensive and could make your employees nearly as happy.
You can thank the financial and professional-services sectors for building interest in the idea of repaying employees’ student loans, a trend that is just getting off the ground but could help encourage employees to stick around for the long haul.
Earlier this year, PricewaterhouseCoopers announced it would give its employees up to $7,200 to cover student loan repayments. And this week, Natixis Global Asset Management revealed it will pay up to $10,000 of employees’ student loan bills—first in a $5,000 lump sum on an employee’s fifth anniversary, then in five separate $1,000 payments.
“We think this is going to be a strong benefit,” John Hailer, president of Natixis in the Americas and Asia, told The Boston Globe. “I’m hoping that it’s going to be like the retirement account.”
The company’s senior vice president of retirement strategies, Tracey Flaherty, noted to CNN Money that the approach was also intended to “make sure our own people are on sound financial footing.”
Data from the Society for Human Resource Management (SHRM) shows the concept is very new, with only 3 percent of employers offering student loan repayment as a benefit option, according to the organization’s 2015 Employee Benefits Survey [PDF]. But, because the job market is starting to improve and talented employees are hot commodities, the strategy is picking up more interest.
“Employers aren’t doing this to be nice. They’re doing this as an investment—and to differentiate themselves so they can continue to pull from the top of the talent pool.” SHRM Compensation and Benefits Manager Bruce Elliott told Bloomberg Business.
With the average 2015 graduate carrying roughly $35,000 in debt, according to Edvisors, such a benefit could take away a significant financial burden for employees.
The question is, will this beat out the offer of pet insurance in the coming years? Only time will tell if it becomes an across-the-board trend.