If you have student loan debt, you’re not alone. Over 44 million workers, from recent college graduates to those near retirement, are paying off loans. Currently, Americans have over $1.5 trillion in student loans. Most employees want employers to help them pay off some of that debt. Here are some facts to share with your boss.
Use Existing Budget Resources
Thousands of employers have expressed interest in helping employees repay their student loans. But many say they don’t have financial resources to increase their budgets. Some also are concerned about offering equitable benefits for all employees.
Instead of increasing benefits budgets, employers can use existing resources. The majority of employers offer 401(k) retirement match funds programs for employees. But every year employees leave about $24 billion employer match funds on the table. Many workers say that after making their student loan payment and covering living essentials, they don’t even have that have extra money each month to save for retirement.
Employers can offer Employee Choice, a student loan repayment benefit that uses the funds they’ve already set aside for 401(k) matching contributions. Employees can apply unused matching dollars to help repay their student loans. Or, they can split the matching funds to make a payment to their student loan debt and save the other part for retirement. And for employees who don’t have student loans, they can continue to use employer 401(k) match funds for retirement savings.
Attract Talented Team Members
Employers are competing for the best employees to fill many open positions. One way to attract talented team members is to help them repay their student loans.
Prospective employees want to work for employers who offer a student loan repayment benefit. It’s projected that many people won’t pay off their student loans for at least two decades. This debt burden affects employees’ dreams of buying a home or better vehicle, starting a family, or saving for retirement.
Research shows that 52 percent of employees were attracted to a job if the employer offered to assist them in repaying their student loans. Prospective workers said this benefit was more important than many other traditional benefits and perks.
Employers who help employees repay their student loans also are finding that they attract more talented and diverse applicants to positions.
Both younger and older employees are affected by student loan debt. And while employees ages 25 to 49 carry 70% of the student loan debt, many older workers also have student loans.
Research shows that employees into their 60s owe nearly $229 billion in student loans, or about $33,000 each. Older workers have borrowed money to return to college to keep their job skills relevant or to help their kids or grandchildren with college tuition costs.
Studies show that employees are likely to stay more than five years with an employer if they receive student loan repayment assistance. So, offering this benefit can increase employers’ retention and
lower turnover costs.
Improve Job Performance
Employees with student loans worry about how to repay their debts while also covering health, family and daily living expenses.
Studies show that employees who receive help repaying student loans tend to be less stressed and take fewer sick days. During the workday, they can focus better on their jobs and they are investing in seeing the business succeed.
Research shows that these employees also are more committed to their jobs. They believe their employer cares about them and wants to help them improve their financial well-being.