As an information specialist, I enjoy tracking employee benefits in the news. Last December I wrote a blog post exploring how student loans impact all generations in the workforce. Since then, I’ve consistently seen mainstream media coverage of companies launching student loan repayment as an employee benefit. I’ll share some of what I’ve learned so far in 2016.
Are more employers offering student loan repayment?
Yes, there’s been a slight uptick according to several sources. Here’s the prevalence data found in recent industry surveys:
- The International Foundation Employee Benefits Survey 2016 found 2.7% of corporate employers and 5.9% of public sector employers offered student loan repayment programs.
- The Plan Sponsor Council of America’s report, titled “The Impact of Student Loan Debt on Defined Contribution Retirement Plan Participation: Plan Sponsor Perspective,” found 1.4% of plan sponsors offered this benefit, 11.5% are considering it and nearly 30% are undecided.
- Willis Towers Watson’s Voluntary Benefits and Services Survey found a 4% offer rate in 2015 and predicted the rate could dramatically grow to 26% in 2018.
- Society for Human Resource Management’s 2016 Employee Benefits Survey showed an increasing trend with 4% of respondents offering student loan repayments as an employee benefit, up from 3% in 2015.
[Related: Employee Benefits by Generation | Benefit Bits Video]
What are some employers offering?
Like other benefits, employers design student loan repayment plans with great variation. Typical employer payments range from $100-$200 per month or, if an annual lump sum is paid, $1,200-$2,400 per year. Lifetime maximums range from $7,200-$10,000 but some companies have no dollar limit on the repayment amount. The employer contribution could go directly to the student loan account or to the employee’s 401(k) account. More design details can be found in posts at Business Insider, Forbes and Willis Towers Watson Wire.
[Related: Financial Education for Today’s Workforce: 2016 Survey Results]
Personal financial issues have a significant impact on the overall job performance of participants—Paying student loan debt was cited as a common financial challenge by 21% of respondents of our Financial Education for Today’s Workforce survey. Early adopters of student loan repayment programs include companies in industries such as insurance, technology and financial services.
It will be interesting to see if the trend will spread to a broader range of employers. I’ll keep an eye on it and report back to you here on the Word on Benefits.
Jenny Lucey, CEBS
Information/Research Specialist at the International Foundation