Losing talented employees ranks among the top issues on employers’ minds, reports a new survey of human resource professionals. Among the challenges that keep employers awake at night are attracting, engaging, and retaining talented and diverse employees.
How to compete for talent
There is one thing we know for sure. More and more employees are entering the workforce with student loan debt. The Federal Reserve reports that over 44 million American adults owe $1.5 trillion in student loans. Another $1.27 trillion in new student loans will be added by 2028.
Employees are looking for employers who will help them pay off their debt. Consider six reasons why student loan repayment is an essential benefit.
Millennial employees, who make up 35 percent of today’s labor force, are more engaged and willing to stay with an employer who helps them repay student loan debts. By 2025, millennials will comprise 75 percent of the workforce.
In business surveys, employers report that helping employees repay student loan debts is not a priority or an issue of significant concern to workers. But national statistics and news reports tell another story:
- Millennials on average owe $35,000 in student loans.
○ Three in 10 millennials have less than $1,000 in personal savings; 24 percent have no personal savings.
- Among 2018 college graduates, 69 percent had student loans.
- Employees ages 40 and older also have extensive student loan debts. Research shows that workers into their 60s owe nearly $229 billion for college loans, or about $33,000 each. They’ve taken out loans to pursue graduate degrees, get additional training, or to assist kids and grandkids in earning college degrees.
Lowers turnover, hiring costs
Paying off student loan debts could take employees 20 years or longer. Research shows that 86 percent of employees with student loan debts would commit to a company for five years if the employer provided repayment assistance.
Retaining employees is a bonus for employers. When employees leave, recruitment experts say it costs employers 33 percent of the worker’s annual salary to hire a replacement. Employers who spend less money replacing employees can invest in employee development. And the money employers save on hiring and training would more than pay for the cost of a student loan repayment benefit.
Workers appreciate employers’ investment in helping them resolve financial worries. And employees who are satisfied at work tend to become more engaged and involved in the success of the business.
Prospective job applicants with student loans are actively looking for employers who provide student loan repayment assistance. And employers offering this benefit are finding that they attract an increased pool of talented, diversified workers. Few other employee benefits provide such strong interest in open positions. It’s especially valuable for businesses seeking workers for specific skilled positions.
Every employer looks for ways to extend budgets by cutting expenses. It’s the reason many employers say they cannot afford to help employees repay student loans. But if employers have a 401(k) matching fund program, they can use match budget dollars to assist employees in repaying student loans. Find out how you can off this benefit with BenefitEd.
Gives employees flexibility
Employees want flexible benefits. Each year employees leave about $24 billion in 401(k) matching funds on the table. But with BenefitEd, employees can choose to apply these funds toward student loan debts. Or they may elect to put half toward retirement savings and the other half toward student loan repayment.
- An American Student Assistance survey found that 92 percent of employees would take advantage of a match for student loan repayment.
- Another survey discovered that half of the workers with student loans would prefer a repayment benefit over extra time off.