A growing trend in the last few years has been for employers to offer student loan repayment assistance to employees as a benefit. Unlike tuition reimbursement (which has been around for years), student loan repayment assistance is a relatively new concept, but one that is gaining traction.According to the Society For Human Resource Management, about 3% of companies offered some type of assistance program to help employees pay down their student debt. But one thing is for sure, that number is growing.Given the fact that roughly 43 million people have student loans, and that the U.S. Workforce is roughly 144 million people, that means almost 1 in 3 workers has student loans. For employers, helping their employees get out of student loan debt just makes sense.And according to a recent survey from Student Loan Hero, 45% of employees would rather have a student loan repayment assistance program over a 401k. For younger employees (18-24), that number is even higher at 54%. Even more startling, almost 53% of employees would prefer to have student loan repayment assistance over additional vacation.So let’s dive in and see what this trend is all about.
Student loan repayment assistance is an employer benefit that is exactly what it sounds like: your employer will pay off (a portion) of your student loan debt.Every plan is structured a little differently, but there are a few key themes:The taxability piece is important to note. Currently, Congress is considering changing student loan repayment assistance to be a tax-free benefit (similar to tuition reimbursement, healthcare spending accounts, transportation spending accounts, and more). If Congress were to move these benefits to being tax-free, you could likely see a much larger number of companies offering this benefit.
Some companies have partnered with lenders to offer special discounted interest rates on refinancing. We didn’t include those as part of this because refinancing a student loan is not for everyone.If your company offers any type of student loan repayment assistance program, you need to be taking advantage of it. If they don’t, you should ask your HR or management to consider it.Here’s how you sell it. Many companies are finding it’s a great way to retain young talent. On the flip side, employers are able to trim benefits that aren’t used often (maybe a tuition reimbursement plan) and can put those resources towards a more beneficial program.Also, consider reaching out to your U.S. Representative and encourage them to make this a tax-free benefit. That would help you (the borrower), and would likely incentivize more companies to participate as well.Regardless of whether your employer offers these plans or not, hopefully we see more of them coming in the future.