Student loan repayment benefits are on the rise!
Such is the latest from SHRM showing what employers are offering their people.
“Company provided student loan repayments,” says SHRM’s 2019 Employee Benefits report, “have doubled since 2018.”
Financial Wellness for the Employee…and the Organization
It makes sense. Money worries sink productivity. And college debt is one of employees’ biggest sources of financial concern. How do those worries play out?
According to John Hancock’s Financial Stress Survey:
- 69% of employees are stressed over finances
- 72% admit to worrying about personal finances while at work
- Companies are losing $2,000 per employee as a result
Met Life further estimates a 10,000-employee company to lose nearly $30,000…every week.
Getting the Full Rewards
Tangible payments toward employee’s debt are more than symbolic. Paying $2,000 annually toward the principal on a $20,000, five-year student loan will cut the payoff time in half, wrote Alan Robins. Plus, “Over five years, that annual $2,000 payment will cut interest by $2,800, giving your $10,000 investment a 28% bump. That's a significant impact.”
They also do more than dispatch loans – it creates a domino effect. Shortened payoff time increases disposable income, and so frees people to contribute to retirement – another one of the money worries on their list. And don’t forget the braggability factor – “My company is paying my student loans!” – that can’t be overstated.
Still, to be effective, student loan repayment benefits need to do more than just pay down debt; they have to give people confidence in their own ability to pay down their share, too. That’s where financial coaching comes in – something that should be a standard part of any program.
But the trajectory is clear. “Student loan repayment is a burgeoning trend,” one benefits administrator said at a conference recently.
“That market is blowing up.”
