As you apply to college this fall and wonder how you’re going to pay for it, you may be considering taking out a student loan, not knowing for sure if the job you get with your degree will enable you to pay that loan back comfortably.
Many students with loans won’t be able to pay them back comfortably. A recent unscientific survey suggests more than half of recent grads with student loan debt feel the struggle to make loan payments has had a significant impact on their ability to meet other financial goals in their lives. About half of the college grads interviewed for that survey even said they’d rather have a student loan repayment benefit than an extensive healthcare plan.
But some employers, the Baltimore Sun reports, are trying to help out their new employees—and increase the likelihood they’ll stay with the company longer—by providing funds as part of the employee benefits package to help their young employees pay back their student loans.
“I know it’s going to be a big part of my spending and how I plan my life for the next decade or more,” the paper quoted Paul Taylor II, 22, who studied at Bryant University in Rhode Island and faces an estimated $400 monthly payment for the $40,000 he took out in loans. “Any offer to help pay down loans is a great place to be.”
He landed a job at PricewaterhouseCoopers in Baltimore, one of about 4 percent of employers nationwide that offer some form of student loan assistance as part of the fringe benefits. Vault Accounting 50 has ranked PricewaterhouseCoopers, based in New York and London, as the most prestigious accounting firm in the world, several years running, and said it was the top firm to work for in North America.
Fidelity Investments is another one. The company announced in March that they would provide up to $2,000 a year for new employees at the manager level or below to help pay back their student loans, the Boston Globe reported.
- Education approach: Providing simple, straightforward educational employee counseling, both in person and online. These services are relatively low cost and easy to implement but require engaged employees.
- Attraction approach: Offering sign-on bonuses in the form of student loan payoffs. Employers using solely this approach may miss opportunities with tenured employees.
- Retention approach: Offering periodic student loan payments for employees who complete service requirements. Payments extend years after hire, creating a retention incentive.
- 401(k) approach: Working in conjunction with workplace 401(k) plans, employees make student loan payments via payroll deductions that are matched by their employer in the form of pretax plan contributions.
“Student loan debt is not just an employee problem,” Samuel Henson, vice president and director of legislative and regulatory affairs at Lockton, an insurance brokerage, was quoted as saying. “The impact on employees’ personal well-being, their performance on the job, and their retirement readiness is significant, and it is all felt by their employers.”
Even the federal government has realized the strong recruiting power paying back student loans can have. The Pentagon offers plans as incentives for engineers and nurses, calling it a “significant recruitment tool.” The Justice Department primarily offers plans for special agents and intelligence analysts, the Sun reported.
Student loan debt in the US is estimated to be about $1.3 trillion, which is more than the total credit card debt now held by US residents. The average student debt in the US stands at about $29,000, representing nearly a 60-percent increase from about $18,000 in 2007, according to the Department of Education.
Mortgage loans still have more total value over all, but the student loan debt is in second place. As tuition at several universities has increased at rates higher than inflation or, certainly, any cost-of-living adjustments parents have received from their employers, the debt load assumed by students and their families has increased.