Attract New Talent with Student Loan Debt Assistance
Coping with student loan debt is one of the biggest financial challenges for a large majority of recent college graduates. In addition to meeting their monthly payments, borrowers have difficulty obtaining credit, car loans and mortgages, which holds them back from moving on with their lives and establishing themselves as self-sufficient adults. Some employers have begun offering as an employee benefit to help pay for those loans as a way of attracting and retaining talented recent graduates. It’s a win-win proposition that is gaining in popularity.
According to some estimates, the average undergraduate borrower leaves college with as much as $35,000 in debt, resulting in payments of around $300 monthly. While a few companies offer to pay off an employee’s debt completely, depending on the size and the circumstances, most of the companies that have been pioneering this benefit contribute $50 or $100 a month to the loan payment. In most cases, the money is paid to a third party financial firm that then makes the payment to the lender. This ensures that the money goes directly to paying down the loan and not to other expenses.
This benefit has many advantages. Employees who have benefited say they are more likely to stay with the company, and job seekers are highly attracted to companies that offer the benefit. Even at just $50 a month, the benefit can reduce the length of loan repayment by about a third. For new graduates, that means they have a better chance of becoming debt free by the time they reach the age at which they begin to think about getting married, starting a family and purchasing a home. That provides them with some stability, which is good for their employer as well. In addition, it benefits the economy as a whole by helping them to become more financially secure.
To be fair to other employees who have no need for such assistance, you can offer it as part of a menu of benefits. It’s a great way to send the message that your firm is an employer that cares about its employees—a quality that both employees and job seekers ran high among the reasons they want to work for a particular company.