With Millennials now representing a key — and growing — workforce cohort, corporate America is becoming sensitive to the debt challenge they face. Roughly two-thirds of the nation’s student debt is held by people over age 30, and their prolonged financial stress for a decade or more after they graduate can have a negative impact on productivity. And, as employers compete for talent,
student loan assistance is seen as a way to modernize benefits to respond to a clear need.
This new employer interest has given rise to a spectrum of approaches. In general, employers are expanding their financial well-being programs to include student loan assistance programs in the following categories:
- Student loan counseling
- Student loan consolidation
- Student loan repayment matching
- Student loan repayment assistance
The student loan assistance program — from counseling to repayment — is a differentiated and attractive arrangement that has benefits for many Gen X, Millennial and Gen Z employees. Programs can be offered as a distinct benefit or as part of a choice design that allows an employee to select from a variety of options, such as a 401(k) match or student loan repayment.
Both program design and available specialty vendors are nascent, and employers must carefully evaluate program structure, vendor selection, legal guidance and communication. Programs that provide counseling, modeling tools and refinancing assistance carry the smallest potential risk while match and allowance programs are more complicated due to the payroll deduction facilities, concerns about state laws and the manner of employer subsidy.
While new and evolving, student loan assistance programs can be a high-value addition that responds to a significant workforce need. Given the generational workforce shifts, these programs present an opportunity for employers to compete for talent in a new way. For employers seeking to align their brand, reward strategy and employee value proposition, a student loan assistance program can be a key element in updating benefits to meet the needs of a new workforce.