Why Student Loan Assistance Is One of Today’s Hottest Benefits
When U.S. president Joe Biden announced a plan in August to forgive a significant amount of student loan debt, many Americans sighed with relief. His executive action wiped out the debt for nearly a third of the 45 million Americans with student loans. But Americans held a staggering $1.7 trillion in student loans before the announcement — which means many young people are still entering the workforce saddled with debt.
For recruiters, this presents an opportunity. In the current hot market for talent, student loan repayment programs can be a make-or-break benefit for candidates, especially those who are early in their careers or just starting full-time work. According to PwC, 54% of millennials are concerned about being able to repay their debt. And research by Betterment found that 85% of employees would leave their current job for a company that offered more financial support for student loans.
Companies have increasingly begun to offer this benefit. In 2020, the Society for Human Resource Management reported that only 8% of the employers surveyed offered student loan repayment help. By late 2021, nearly half of companies already had a program in place or planned to introduce one in the following year or two.
To stand out in this competitive market, you may want to think about offering a student loan assistance program too. Here are a few things to consider.
The government recently made it easier for companies to help
In the past, companies were sometimes reluctant to offer this benefit because the assistance they provided employees could be taxed. But the CARES ACT, which passed in March 2020, allows companies to make up to $5,250 in student loan payments per worker each year, tax-exempt. The act is one of the main reasons employers have recently begun to add this as a benefit.
Companies such as Google and Nvidia are finding different ways to help
Many companies have already implemented student loan assistance benefits. In 2020, Google announced that it was introducing a student loan repayment program, matching up to $2,500 per U.S. employee per year in student loan payments. Meanwhile, the education technology company Chegg has been helping employees pay off loans since 2015; U.S. employees that have at least two years at Chegg can receive $1,000 in cash and up to $5,000, through a stock-sharing program, per year, towards their loans.
Since 2017, the tech company Nvidia has also offered student loan assistance for employees who work at least 20 hours a week; eligible employees can receive as much as $6,000 per year and up to $30,000 total. The payments are made directly to the loan provider — an arrangement that may be easiest for employees.
Student debt is an equity issue too
While loan repayment assistance is a great recruiting tool, it’s also an equity issue. According to a 2021 report by the American Association of University Women, women hold two-thirds of all student debt in the U.S., averaging $31,276 in loans. At the same time, recent female graduates earn 82% of what male graduates make, which places an undue burden on about half the workforce.
For Black women, it’s even tougher; 57% of Black women college graduates report financial difficulties repaying their student loans. And, on average, Black college graduates — both men and women — carry about $25,000 more in student debt than white graduates four years after completing a bachelor’s degree.
Final thoughts: A renewed call for skills, not degrees
Sarah White, who runs the HR research and advisory firm Aspect 43, recently offered a refreshing perspective on this subject on LinkedIn. “If you really wanna help solve student loan debt,” she wrote, “we need companies to stop requiring a degree for jobs that do not need a degree.”
She then elaborated: “Do you need a degree to be a great CEO? No. Salesperson? No. Admin? No. Customer Service Person? No. Plumber? No. Programmer? No. Doctor? Yes.”
Sarah mentioned that some of the best talent she’s ever mentored had no college degrees, and she urged readers to push back against the narrative that a degree should be a minimum qualification for many jobs.
So, yes, student loan assistance is a benefit that will help attract and retain employees. But companies can also help by rethinking which jobs do and do not actually require a degree.
*Photo by Andre Hunter on Unsplash
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