Student loan repayment has officially gone mainstream.
So says a new CNBC report showing the benefit gaining ground — snowballing from a handful of companies just a few years ago, to hundreds of employers today.
“This is certainly emerging as a new and very important benefit,” David Pratt, an Albany Law School professor who studies employee benefits, told CNBC.
Why all the attention?
The time is right
After commencement, this year’s grads will repay a record $37,000 in college debt. Employers have their own problems, namely a talent shortage in the millions and unemployment dipping to a record-setting 3.9%. Loan repayment becomes your ace recruitment tool — taking on one problem by addressing the other.
Retention and recruitment are at stake
In one study, roughly a third of Millennials blamed debt for their notorious reputations as job hoppers. “If a company offered student loan repayment as a benefit,” one hopeful Millennial remarked on a LinkedIn story on the subject, “I would most definitely stay at the company longer.”
The problem isn’t going away
Average debt has grown by $20,000 in just over a decade. And projections show four-year-degrees rising to over 300K in the near future.
Later might be too late
Today’s debt-repayment programs brand employers as forward thinking and desirable. Tomorrow’s potential tax breaks – a bill under consideration would provide tax incentives up to a $5,250 cap – could make the benefit as common as a 401k. That will not only penalize those caught unprepared, it will also rob late comers of the opportunity to make a splash.
The potential ROI is enormous. But it takes more than good intentions to make it run. Loan repayment can reach specific goals, but only if you design your program with your target in mind. And debt is complicated – flummoxing even rocket scientists. So loan repayment won’t get you far if it doesn’t include guidance to keep employees up to date on the rest of their obligation.
Finally, helping with debt repayment is only part of the solution. Many in the CNBC report talked about the skyrocketing cost of college, and the need for more employers to take on costs from the other side of education – tuition assistance programs — so degrees never turn to debt in the first place.
Without thinking through all the angles, “The problem,” said the Albany Professor, “is we’re treating the symptom of a disease.”