According to Forbes, student loans are now the second largest consumer debt category, just after mortgages. Class of 2016 graduates owe $37,000 in student loans on average, 2017 graduates owe almost $40,000, and student loan debt contributes greatly to employee financial stress.
Turnover and retention are a frequent sore spot for employers with their younger employees, and many trailblazing companies are starting to attract – and retain – new workforce entrants with a student loan repayment benefit. There are two main examples of how a repayment benefit can be executed, as described by the Consumer Financial Protection Bureau’s 2017 report on student loan repayment assistance programs.
Supplement Regular Monthly Payments
The employee continues to make their regular monthly payments, and the employer provides additional payments on top of the employee’s monthly payments. The employer can contribute monthly, quarterly, annually, etc.
Making additional payments for the employee will help them pay off their loan faster, since they are also contributing to the sum, and will decrease the amount of interested accumulated.
Replace All or Part of Monthly Payments
The employer replaces payments on behalf of the employee – either partial or full coverage of the monthly amount due. The employer can either pay the loan company directly, or reimburse the employee/provide a stipend.
This method allows greater financial flexibility for the employee, especially while early on in their career.
Offer a Student Loan Assistance Program
The employer offers a student loan solution like GotZoom as part of the employee benefits program.
The employee gains a dedicated resource to help research ways to reduce debt and monthly payments.
This is a minimal cost to the employer and is more private and portable solution for the employee.
What Student Loan Solutions Are Available?
With nearly 70 federal student loan repayment and forgiveness programs, the options to reduce debt are exceptional. If you want to look into an affordable way to help employees with student loan debt, GotZoom is a great place to start, as shown by these real-world results.
Retention: equates to a 5%-20% raise
Recruitment: 83% of millennials seek a student loan benefit
Value: 3-year ROI 140%
Average student debt reduction of 65% (2017)
Upfront visibility of savings
Differentiate Your Company with Student Loan Repayment Benefits
Student loan repayment could be what sets your company apart for jobseekers, and could greatly help with current employee retention, employee outlook and happiness, and employee productivity while at work.
Integrity Data specializes in customized plans and advice for employee financial wellness. We will help analyze your company and consult your organization with the best solutions on starting your new benefit plan to stay ahead of the trend. Contact us today to get started!