Millennials – those born between 1980 and 2000 – are expected to make up 50 percent of the workforce by 2020. By 2025, that percentage is expected to increase to a whopping 75%. 1 In today’s competitive environment for this large segment of highly skilled college graduates, one benefit trend getting a lot of buzz is student loan repayment.
Currently, only 3% of companies surveyed in the Society for Human Resource Management’s 2015 Employee Benefit Survey have such an offering. 2 However, Bruce Elliot, SHRM’s manager of compensation and benefits, predicts that over the next three years, these loan repayment benefits will become as common as health insurance. The growth potential is easy to understand when considering the average student loan debt at the end of 2014 was $35,000 per borrower. 3
Most loan repayment benefits currently in place offer monthly employer contribution’s ranging from $100 to $250 per month. Conditions such as length of employment, continued employee contribution, and maximum contribution caps usually apply. Nataxis, an asset management firm, has recently added a $10,000 version of this benefit for employees who have been with their company for at least 5 years. The company’s initial debt contribution is $5000 followed by 5 additional years of $1000 each. Pricewaterhouse Coopers (PwC) is offering $1200 per year for up to six years for some of its employees. 4
According to Ed Farrington, executive vice president of business development and retirement at Natixis, employee retention and turnover is one of the biggest issues facing employers now that the economy has recovered. He feels this benefit aimed directly at millennials might be the game changer when attracting young talent. In fact, when asked in a “Life Delayed” survey by American Student Assistance, 76% of respondents said that a student loan repayment program would considerably affect their choice of employer if all other things were equal. 2
1 http://next.bncollege.com/wp-content/uploads/2014/09/Millennial%20Survey%20Report_FINAL914.pdf
2 http://www.usnews.com/education/blogs/student-loan-ranger/articles/2016-03-09/more-employers-offer-student-loan-repayment-benefits
3 https://www.whitehouse.gov/sites/default/files/docs/millennials_report.pdf
4 http://www.bloomberg.com/news/articles/2015-12-08/the-hot-new-company-benefit-student-debt-repayment