The war for talented employees remains a top priority for employers. Companies are also recognizing the need to increase the diversity of their workforce. Offering competitive pay, good health benefits, and perks are important steps. But many employers are finding that offering another key benefit is essential to employee recruitment success. Consider how a student loan repayment benefit can boost employee diversity, recruitment, and engagement.
Captures job seekers’ attention
Job applicants with student loans are actively looking for employers who provide student loan repayment assistance. Research shows that college students who graduate with a bachelor’s degree, on average, take about 20 years to pay off their debt. And for those workers who pursue graduate degrees, they may make payments on student loans for at least two decades.
For employees with student loans, receiving help to pay off their debts can drastically reduce the total amount they owe.
Studies show that the majority of adults with student loans are women and minorities. Employers offering a student loan repayment benefit are discovering the unexpected advantage of having talented, diverse workers apply for positions.
Many younger employees want to work for a company that employs those with diverse backgrounds and cultures. When they interview for positions, they look to see if they will feel comfortable in the work environment. They want to know they’ll work with employees of different demographics. Some may not accept a job if they don’t see the right mix of workers.
Develops engagement, lowers turnover
Women and minority applicants believe employers that help workers repay student loans are concerned about their needs and financial well-being. And the job becomes even more desirable if employers offer career growth opportunities. The combination of these two benefits goes a long ways toward engaging employees with their work.
As employees become committed to their jobs, their loyalty to their employer also increases. Workers become more dedicated to helping employers succeed. In turn, many employers see a decrease in employee turnover. This is a benefit to employers since the cost to replace an employee is about 20% of the annual salary for mid-range positions earning $30,000 to $50,000 a year.
Increases creativity and innovation
Employers with diverse workforces notice an increase in creativity and innovation. Workers from different cultures and backgrounds have a variety of perspectives, ideas, and experiences. They draw on their differences to develop solutions to problems. Their combined ideas can help employers develop new products and services. Employees enjoy working on team projects, encouraging team members’ growth and development of knowledge and skills in new areas.
Why it’s easy to offer a student loan repayment benefit
Every year, employees leave $24 billion in 401(k) matching funds from employers on the table. Often, they don’t take advantage of match funds because they have little money left after making their loan payment and covering essential living costs.
The BenefitEd Employee Choice program allows employers to provide equitable benefits for all employees without an increase in budget. Employers can use the funds they’ve already set aside for matching contributions.
Employees can apply their unused match funds toward their monthly student loan payment. Or, they can split the match amount to make a payment toward their student loan debt and contribute the other part toward their employer 401(k) retirement savings program.