Student loan repayment assistance is one of the top benefits employees want. Some workers search for employers who offer student loan help when looking for a new job. Research shows that 86% of employees with student loan debts would commit to a company for five years if their employer provided repayment assistance.
Most employers would like to help employees pay off their student loans but aren’t sure how to offer this benefit. Here are five unexpected ways employers can help employees with student loan payments.
- Use money on the table
- Provide information on loan refinancing
- Trade-in unused vacation days
- Donate company shares
One simple and easy way employers are assisting employees with student loan payments is by offering Employee Choice. It is a student loan repayment benefit exclusively offered by BenefitEd. It’s designed to use funds employers already have set aside for 401(k) matching contributions.
The Employee Choice plan allows employers to stretch their benefits budgets because they don’t have to adjust the budget they’ve already set aside for 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.
Each year, employees leave about $24 million in 401(k) matching funds on the table. Employee Choice offers a simple way to use existing funds to provide student loan payment relief for employees.
Many people who take out student loans have a high interest rate. Instead of continuing to pay this rate for the lifetime of the loan, employers can help workers find different private refinancing options for their employees with student loans.
Sometimes people wonder whether refinancing is worth their time and effort. But on average, many borrowers take 20 years to pay off their student loan debts. Employers can work with BenefitEd and U-fi to start a program to support student loan refinancing. Even saving a small amount each month can lower the total cost they will pay over the life of the loan.
Every year, American workers use about 54% of their eligible vacation time. Only 23% of employees use all of their paid time off, and about 10% take no time off at all. Some employers are now encouraging employees to convert their unused vacation days toward a payment on their student loan debt. BenefitEd has flexible admin options to help employers explore other unique benefits to support their employees’ financial goals.
Help with kids’ college loans
As college tuition costs continue to increase, many employees age 40 and older are helping their kids and grandkids with college tuition costs. Often, they take out loans to cover these expenses. Research shows that many workers in their 60s owe nearly $229 billion for college loans, or about $33,000 each. Most expect to make payments in their retirement years.
One way employers can assist older employees adding to their, or their family members’, educational goals is to provide funds to a college 525 savings plan. A 529 plan is a tax-advantaged savings plan that can help workers save money for their kids or grandkids’ college expenses.
Employers who give business stock options to employees are encouraging them to convert the shares they receive toward a student loan payment.