Only about 4 percent of employers offer student loan benefits, so it's one of the best ways to set your company apart when recruiting top millennial talent. (Photo: Shutterstock)
It's a commonly cited statistic: Americans have more than $1.6 trillion in outstanding student loan debt. In fact, student loan debt is so crippling that in 2016 the New York Fed sounded an alarm about negative household income, and its potential impact on the future of the economy.
Related: 10 states with the highest average student loan debt
As a result, it's no surprise that many workers are hoping for help with their student loans from their employers. If you want to attract top talent—and retain millennial employees—consider adding student loan repayment to your benefits package through a third party vendor.
Workers value benefits above a higher salary
If employees are feeling stressed about student loan debt, it might seem intuitive to just raise their salaries. After all, with more money these workers would be able to pay off a larger chunk of their student loans. However, today's employees are interested in the full package, not just salary.
There is a body of research spanning decades that indicates that employees are more interested in better benefits than in higher salaries. To capitalize on the importance that employees place on benefits, however, decision makers must be deliberate about the types of benefits and perks that workers are most interested in at the current moment. And right now, student loan repayment is high on the list of what workers want.
Recent research from SCORE, a business mentoring network, indicates that four in five employees prefer better benefits or perks to a raise in pay. Workers feel that perks contribute to a higher quality of life and make them feel valued. In fact, quality of life is so important to millennials that they would take a $7,600 pay cut in exchange for an improvement.
Today's employees want student loan repayment benefits
According to a survey from American Student Assistance, student loan debt is the biggest financial concern for workers aged 22 to 33. The report also show that 86 percent of employees will commit five years to a company in exchange for student loan repayment help.
On top of that, nearly half of employees consider student loan assistance when choosing a job, according to SCORE.
In terms of most desirable benefits, according to the Harvard Business Review, student loan assistance ranks fairly high, only beat out by better health insurance and perks like flexible hours and vacation time.
Only about 4 percent of employers offer student loan benefits, according to the Society for Human Resource Management, so it's one of the best ways to set your company apart when recruiting top millennial talent. By adding a student loan repayment program, you can encourage candidates to choose your company and stick around for longer.
Address employee pain points and reap the benefits
Student loans are such a pain point with many workers that the perceived value of a dollar going toward student loan repayment is higher than the perceived value of higher pay. Repayment assistance, therefore, seems more attractive to employees than a higher salary.
While there are costs to offering a student loan repayment program, employers are likely to see net benefits on their end. According to PricewaterhouseCooper, financial stress — including that caused by student loans — impacts companies' bottom lines through absenteeism, taking care of financial issues while at work, and increased health costs. Help employees by providing financial wellness perks, and you could actually improve your overall business operations.
Right now, student loan repayment benefits don't enjoy the same tax advantage for companies that 401(k) benefits and other perks do. However, as more workers demand these benefits, and as more employers pressure lawmakers, it's likely that policymakers will respond, leading to a win-win for employers and employees alike.
Read more:
- Student loan help or vacation days? One company letting employees choose
- Sponsors ask IRS to extend 401(k) student loan ruling to all qualified plans
- Millennials' spending weighed down by student debt, expert warns
Gregory Poulin is the co-founder and CEO of Goodly. Goodly lets companies offer student loan assistance as an employee benefit.
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