Debt and a degree go hand-in-hand for most Americans who pursue higher education. The average college graduate owed more than $30,000 in student loans, according to the Student Debt and the Class of 2015 report by the Institute for College Access and Success.
The problem is, it can be difficult to begin a career and support yourself when you have a large debt to pay. A survey by the American Student Assistance nonprofit organization on the impact of student debt in 2015 found 35% of borrowers found it challenging to buy daily necessities because of student loans, 62% had to delay saving for retirement, 52% experienced debt affecting their ability to make larger purchases and 55% found the debt affected their ability or decision to purchase a home.
What can be done to help graduates pay down their debt and get on with life? One solution is student loan repayment employer benefits. SoFi surveyed 1,000 college graduates about them and found that 90% would be more willing to accept a job offer with the benefits, 94% would stay with an employer longer and 67% would have a reduced level of stress and a better attitude.
What are student loan repayment employer benefits?
They are benefits provided by employers to employees with eligible student loans. The employer makes periodic payments to help the employee repay the amount that they owe.
How do the student debt benefits work?
Each company designs its benefit plan and they widely vary.
There are some emerging trends, says Jenny Lucey, information/research specialist at the International Foundation of Employee Benefit Plans, benefits are being given to employees either monthly or yearly with monthly amounts ranging from $100- $200 and yearly amounts ranging from $1,200 to $2,400. Some plans have benefit maximums that range from $7,200 to $10,000, while others don’t have caps.
Qualifications for the benefits might take into account the following factors:
- Covered loan types (federal, private or both)
- Tenure with the company
- Time since graduation
- Employees eligible (full-time, part-time or both)
The benefits are typically paid directly to an employee’s student loan account, but some companies pay them into their employees’ 401(k) account. While the benefits paid directly to student loan accounts are currently considered as taxable income, a federal congressional bill recently introduced will exclude them from federal taxation, if passed.
From the employers’ perspective
According to the Voluntary Benefits and Services Survey from Willis Towers Watson, about 4% of U.S. employers offered student loan repayment employer benefits in 2015. However, 92% of employers surveyed in 2016 said voluntary benefits and services (such as a student debt repayment program) will be important in the next five years, up from 73% in 2015. Because of the increase in priorities and interest, Willis Towers Watson predicts the percentage of employers offering student debt repayment benefits could reach as high as 26%.
Here are a few of the companies already offering student loan repayment plans.
- Fidelity: $2,000 per year ($10,000 in total) (source)
- PricewaterhouseCoopers: $1,200 per year ($7,200 in total) (source)
- Nvidia: $6,000 per year ($30,000 in total) (source)
- Staples: $1,200 per year ($3,600 in total) (source)
- SoFi: $200 per month (source)
Where can employers get student loan benefits for employees?
SoFi is an online finance company that offers these services to employers as an administered benefit. As a financing company, SoFi has a unique package for employers, offering employee benefits that include refinancing, student loan contributions and education resources. The refinancing can help borrowers save money on their loans with low rates and no fees. SoFi reported its members average $288 in savings per month. Employers can customize the contribution benefit, with options such as designating who is eligible and how much the contributions are. Employees enroll and enter information about their student loan, and the contribution is sent directly to the loan servicer each month.
Other emerging providers include employee benefit platforms such as EdAssist, IonTuition and Tuition.io. All three of these focus on assisting employers with setting up contributions to their employee’s student loans while helping employees to manage their loan repayment.
Student loan benefits review
Having employers help to repay student loans can ease the struggles graduates are facing as they balance loan payments with other costs of living. Employers who adopt these benefit plans can gain the advantages of attracting top talent, retaining employees longer and reducing employees’ financial stress levels.
If you’d like to learn more about student loan repayment benefits and how they work, head over to our in-depth review of SoFi. From there, you can visit their website and read the details for both employees and employers.
If you’re struggling with student loans and your employer has yet to offer student loan repayment benefits, you can still review and compare student loan refinancing options to find out if you can lower your payments. SoFi offers great refinancing options as well as LendKey and CommonBond. Head over to our Student Loans review page to learn more.
Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar, Interest.com, Commonbond, Bankrate, NextAdvisor, Guardian, Personalloans.org and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.