Today’s national student loan debt is higher than ever at a total of $1.6 trillion as of June 2019. Employees trying to pay off this college debt on a low salary might struggle to make payments, especially if they owe upward of $100,000. That’s why more U.S. businesses are stepping up to provide unique ways for employees to pay off their college debt.
The Society for Human Resource Management (SHRM) reports that around 4% of U.S. companies now offer some sort of student loan assistance as a company benefit. Well-known businesses such as IBM, Staples, Peloton and more are paving the way for other companies to examine how they can help employees with student loans. Here are some ways you can make a difference in employees’ college debt:
Offer Monthly Contributions to Student Loan Bills:
Giving employees a monthly contribution to student loan bills can help college graduates and your company. For example, Live Nation Entertainment in California started offering a $100 monthly stipend for employees to put toward student loans. This helps employees make or even exceed their monthly payments and encourages greater retention rates. For employers struggling with high millennial turnover, offering student loan payments with a starting salary can help incentivize employees to stay longer.
Trade Unused Vacation Days for Student Loan Payments:
Other companies let employees cash in their unused vacation time to combat paying college debt on a low salary. Insurance company Unum in Tennessee uses this option and gives employees 28 vacation days a year. Employees are allowed to use up to five of those days for student loans, and can either opt into or out of the program.
Give Signing Bonuses for Student Loans:
It’s very common for companies to give signing bonuses and offer to pay part of an employee’s moving expenses. However, some companies have started offering employees a signing bonus specifically for student loans. This bonus may start at $1,000 and increase every year an employee stays with the company. A business might increase it to $5,000, for example, after an employee stays five years. It’s a great way to use a starting salary to pay college debt while encouraging employees to stay with a company.
Promote a 401(k) Match Program Tied to Student Loans:
Everyone knows how important a 401(k) program is, and many look to see what an employer will contribute when considering a position. However, Abbott Laboratories took a different approach to the typical 401(k) program. The Wall Street Journal says Abbott will put 5% of an employee’s pay into a 401(k) as long as the employee contributes 2% of their paycheck to student loans. Like vacation time, employees can either opt into or out of this program as a way to pay off student loans faster.
Exchange Company Stock to Pay Off Student Loans:
Finally, companies can choose to let eligible employees exchange company stock for student loans. Chegg provides this option to employees instead of a 401(k) match program to help employees handle student loans and a low salary while also saving for retirement. It’s important to create guidelines for annual amounts based on employee positions, to make sure no one is taking advantage of the program.
Help Combat Growing Student Debt
Your company can make a difference in your employees’ student debt. Contact Reaction Search International today to learn more about how your company can help.