In today’s competitive talent marketplace, student loan assistance is an emerging benefit that any company can offer to encourage the younger generation to join or stay with their company. How a company can implement this can vary greatly. For example, at employee benefits provider Unum, employees can trade up to five days of vacation (40 hours of unused PTO) for a payment against their student loan debt. Unum, finding that their employees’ PTO was being underutilized, decided that this helped solve two problems at once.
There are plenty of examples of unique offerings of this benefit, but this article focuses on three common HR initiatives that you might have on your plate for 2019: recruiting, retaining, and engagement.
PricewaterhouseCoopers (PwC), a global accounting and consulting firm and an early adopter of a student loan repayment plan, found that this program has become a huge factor in the job acceptance rate among applicants. This could perhaps be due to how emerging a benefit this is, with only 4% of U.S. employers offering a student loan assistance benefit (according to the 2018 SHRM Employee Benefits survey).
Student loan debt repayment can be a strategic employee benefit for attracting younger employees entering the workforce who are early in their careers. Employees are trying to balance life and work issues like never before; student loan repayment, coupled with a financial wellness program, can be all you need to win the recruiting battle. If your positions require a college degree or have been attracting mainly Millennial or even Gen-Z applicants, providing student loan assistance can be the difference-maker to getting an accepted offer.
Loan repayment also provides several ways for companies to retain workers after they’re hired. A study released by American Student Assistance study found 86% of employees ages 22 to 33 would commit to a company for five years if the employer helped pay back their student loans.
As we pointed out in our previous article, "Cost of employee turnover," SHRM estimates employers will need to spend the equivalent of six to nine months of an employee’s salary in order to find and train their replacement. That means that for an employee salaried at $60,000 will cost the company anywhere from $30,000 to $45,000 to hire and train a replacement. This doesn’t include interview expenses, advertising costs, or if this new hire will work out.
Either way you look at it, you are rewarding employee loyalty with helping your workforce free up funds to buy a house, start a family, or increasing their investment for retirement. The best way to gauge enthusiasm for a student loan assistance program would be to conduct an engagement survey that assesses the needs of your employees, something our Workforce Technology team would be able to help provide.
By 2025, Millennials will make up 75 percent of the workforce. Many of these employees are happy to save for retirement, but they have other priorities that affect them now, such as paying down student loans debt. Employees feel vulnerable, desire financial security, and are willing to work for it. To keep employees engaged in saving for retirement, companies like Travelers will make a matching contribution to the 401(k) accounts of employees who are actively paying down student loan debt. Employees who participate in the program could accumulate tens of thousands of dollars in their 401(k) accounts over a decade and the amount Travelers contributes could be worth hundreds of thousands of dollars at retirement. Structuring a student loan repayment program like this would especially valuable if you have low 401(k) enrollment or have employees choosing to not take advantage of your match.
Many companies want to help their employees with their student loan issues but simply don’t have the budget to fund a student loan repayment program. AECOM, a fortune 500 engineering firm, had a goal to find a low-cost solution to help their employees with their student debt. A platform like this can include student loan refinancing, certified debt counselors, budgeting and loan payment tools, education on student loan forgiveness for eligible employees. Even employees that don’t have student loan debt but have college-aged dependents can capitalize on college cost planning tools, and tools to help students determine what they can expect to make with the degree they are thinking about pursuing.
In the competition for talent, industry experts anticipate there will be a 24% increase in the number of companies offering student loan debt repayment programs as an employee benefit this year. Will your organization take advantage of this emerging benefit? For more information about this offering,
Arthur consults with employers on financial technology solutions. He helps clients create tailored, client-specific financial solutions that support the overall business goals of the client. With an extensive vendor network and an agnostic approach, Arthur carefully pairs each client with a right-fi
Arthur consults with employers on financial technology solutions. He helps clients create tailored, client-specific financial solutions that support the overall business goals of the client. With an extensive vendor network and an agnostic approach, Arthur carefully pairs each client with a right-fit financial technology solution that will help clients attract top talent, drive employee engagement, and be the employer of choice. Arthur has been in the financial services industry since 2012, holding positions focused on leveraging technology to produce top results. While working for the 4th largest broker-dealer network in the US, Arthur leveraged his skills to consult over 6,500 financial advisors on best technology practices and finding the right product to best serve their clients.
A recent survey by the Society for Human Resources Management (SHRM) reported 94% of leaders feel employee engagement is an important or very important workforce challenge. An engaged workforce increases operational income by over 19%, while a disengaged workforce can drain over 34% of an organizations’ operational income. Additional risks of low engagement can be seen in increased turnover, low customer satisfaction ratings and even increased employment litigation.
Employee retention continues to be a top concern for employers, even more so than last year, according to a PayScale survey of more than 4,000 executives and human resources professionals.
In 2014, a staggering 59% of employers were more concerned about retaining talent than anything else. Five years ago, only half of those employers thought retention was their number one concern.
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