There's no question that student loan debt has a huge financial impact on our country. The class of 2015 has recently been named the most indebted graduating class. The average student loan debt for this group will be over $35,000, which is more than double what it was two decades earlier, even after adjusting for inflation. So it stands that these educated, well-trained college graduates will be looking for ways to quickly pay down that debt.
Some companies are finding ways to help their employees pay off their student loan debt. The Society for Human Resource Management reports that only 3% of companies are offering this perk, but given the state of things, that number is likely to rise.
Paying Off Student Loans as an Employee Benefit
In the past, there were a select few careers a recent college grad could choose from that promised to pay back some of their student loans.
For example, new physicians who spend some time working in rural communities can get up to $50,000 in student loan forgiveness. Other options include some teaching positions, non-profit work, or various works for the public good.
But these aren't careers that everyone is interested in or suited for. So what about the rest of us?
How Companies Help Employees with Student Loan Debt
In the near future, more employers could be offering this benefit across all business sectors. Some companies will get some government kickbacks and tax breaks, others just want to offer more unique benefits to make hiring practices more competitive. Whatever the reason, this is good news for workers carrying student loan debts.
Why Employers Are Offering This Benefit
As mentioned above, student loan debts are burdensome things for new grads -- more so than any generation before. Since financial stress is generally a top concern for most workers anyway, the added concern of so much debt when beginning a career can be crippling.
When employers are able to find ways to alleviate stress in any form, their employees become a little less stressed out and a little more focused at work.
Smart companies build assistance programs that address all kinds of employee stressors -- whether they're physical, mental, or financial. <-- Click to Tweet
That's because employees with low stress levels can focus more on work, and are more engaged with their companies.
How it Works
Since this benefit idea is in the early stages, there is not yet an industry standard for how to make it happen.
If passed, The Student Loan Repayment Assistance Act could provide tax-free payment options for employers who want to help their workers pay off their loans.
The way things are now, these types of payments would have to be considered a part of an employee's salary and would therefore be taxed.
As an alternative to direct payments, some companies, like Prudential Retirement, will provide a pretax 401(k) contribution as a reward for employees who regularly make their student loan payments.