5 Reasons to Provide Student Loan Assistance as an Employee Benefit
With student debt as one of the leading financial burdens in the US, Student Loan Debt Repayment as an employee benefit has become more desirable for both employers and employees. Here are five reasons why you should consider this benefit for your employees:
1. Recruit better talent
Millennials make up the largest percentage of today’s work force, and many of them are riddled with student debt. Offering an additional plan to help pay off employees’ student debts will make positions at your company more competitive and desirable. In some cases, this benefit can be a deciding factor between job offers and will help speed up the hiring process.
2. Flexible plans and models
Several models of this benefit are available, and it is easy to create a plan that suits your business model. Some companies have a tiered model, through which student loan contributions increase with seniority in the company. Others have specific qualifications for this benefit, such as the employee needing to be a recent graduate or to have worked at the company for a certain amount of time. In addition, some employers offer the benefit directly while others offer it through a third-party platform such as Gradify and StudentLoanGenius.
3. Possible tax exclusion
Although financial assistance on student loans currently does not tax exclusions, it might soon. The Employer Participation in Student Loan Assistance Act (HR 795), a bill that would treat debt payment contributions roughly the same as 401(k) contributions, was introduced and referred to the House Committee on Ways and Means. If this bill were to pass Congress, the contribution would not be considered as taxable income.
4. Immediate impact on employee’s finances
Many working Millennials are reluctant to start retirement funds while they are still paying off their student loans. While 401(k) contributions are helpful and desirable in the long-term, contributions to Student debt repayments show an immediate effect on finances. Student loans are repaid in significantly less time and allows more time and flexibility to contribute to thier 401(k) fund.
5. Increases loyalty to the company
Providing this benefit helps retain talent by increasing employees’ incentives to stay with the company. Because not many employers offer the benefit so far—only 4% do—positions at your company will be considered more desirable, especially if seniority plays a role in your Student Loan Debt Repayment Plan.
For more information on the future of Student Loan Debt Repayment and the Employer Participation in Student Loan Assistance Act, click here. To learn more about vendors that offer this benefit, feel free to email us for a free consultation.