Student loan repayment benefits are still a relatively novel idea, but employers that have added the benefit view it as a way to boost employee recruitment and retention while addressing a serious need for employees, especially Millennials.
The International Foundation 2018 Employee Benefits Survey showed that 3.9% of corporate and public employers offer a student loan repayment benefit.
Memorial Hermann Health System, a health care system based in Houston, Texas, launched its student loan repayment benefit in 2015 and has seen a measurable impact on employee retention. The program was profiled in an article in the February issue of Benefits Magazine.
“We have a recruitment and retention issue within our organization. People can just walk across the street and get a new job within minutes, so we needed to figure out how to solve that problem,” explained John Eshleman, CEBS, director of benefits at Memorial Hermann.
Working with a limited budget, staff needed to look at where the benefit would have the biggest impact. They considered which areas had the most significant staff shortages and how the student loan benefit could best address retention.
After meeting with stakeholders, the benefits team determined that the top need was to improve the health care system’s 75% first-year employee retention rate and that the hardest positions to recruit and retain were registered nurses (RNs).
The program launched in July 2015 and is available to full- and part-time employees who work more than 20 hours a week and have been employed for at least six months.
To be eligible, employees also must have earned a degree in the last three years—a restriction that was necessary in order to keep costs within budget. It limited the number of people who could use the benefit and made Memorial Hermann more attractive to recent graduates. “If we could get new graduates right out of nursing school, then we have a better potential of getting them to stick with our organization,” Eshleman said.
The program appears to have played a role in improving employee retention. The first-year employee retention rate increased from 75% to 85% between 2014 and 2017 among all employees and grew to 95% among those who participate in the student loan program. The first-year RN retention rate went from 75% to 87%.
From 2015 to 2017, participation in the student loan program grew 15% in each quarter.
Considering implementing a student loan benefit? Eshleman offered the following tips.
- Research vendors. Some offer only refinancing or consolidation services, while others offer repayment services.
- Communicate with employees and the vendor openly and frequently. Memorial Hermann started letting employees know about the benefit about five months before it was launched. Staff had weekly phone calls with the vendor after the rollout.
- Tie the program to an existing financial wellness benefit. This will streamline the experience for employees.
- Clearly define program goals. Organizations should consider factors such as business needs and which positions are hardest to recruit. Program criteria should be designed around those goals and to fit within the budget.
- Measure success. Look at recruitment and retention statistics, whether employees who participate in the program are promoted, and employee engagement scores.
Kathy Bergstrom, CEBS
Senior Editor, Publications, at the International Foundation
Related Reading: New Twist to Student Loan Repayment Benefits: Linking to a 401(k)