Posted March 5, 2019
For the 44 million Americans with student loan debts, getting help from employers in repaying their loans is one of the benefits they value most. Review four reasons why employers should offer a student loan repayment benefit to help ease employees’ financial burdens.
Employees of all ages are experiencing chronic stress because of student loan debt. With monthly payments of about $350, employees project they’ll make payments on their loans for several decades. To meet this financial commitment, workers expect they’ll have to forego many normal life experiences, such as buying a home or starting a family.
Many employees with student loans say that working for an employer that provides a student loan repayment benefit would ease their stress and make life more enjoyable.
Engaged employees tend to stay on the job longer, which positively impacts employers’ budgets. When employees leave, recruitment experts say it costs employers 33 percent of the worker’s annual salary to hire a replacement. On average, that’s about $15,000 per person for an employee earning a median salary of $45,000 a year. And employees with student loans usually take up to 20 years to pay off their debts.
If employees receive repayment assistance from employers, they tend to stay on the job longer. In turn, employers enjoy higher retention and less disruption, which means they can spend more time on business growth and product development.
Many employers think they cannot afford to help employees repay their student loans. They don’t have the budgets to support this benefit. But if employers offer a 401(k) matching fund program, which most American businesses do, they can offer a benefit which uses match budget dollars to assist employees in repaying their student loans. It’s a relatively simple benefit to offer, and BenefitEd can help with the administration.
Employees want benefits that are flexible so they can customize them to fit their needs. Employee Choice meets these expectations.
Each year employees leave about $24 billion in 401(k) matching funds on the table. With Employee Choice, employees can designate how they want to use these funds. Some may want to apply the total matching amount toward a student loan payment. Others may choose to split the amount, designating some for retirement savings and the rest for a student loan payment. It’s a win-win benefit for employers and employees.