Modern companies are more than just employers — increasingly, they are also gyms, cafeterias and even laundromats. As perks like yoga class, free lunch and complimentary dry cleaning become the norm, companies continue to push the boundaries on ways to attract and retain top talent by providing much more than a paycheck to employees.
The latest in the slew of new workplace benefits? Student loan assistance.
In April, Chegg partnered with Tuition.io to give full-time employees extra cash for student loan reduction. Then in September, consulting firm PricewaterhouseCoopers announced it would provide up to $1,200 to help employees pay off loans annually.
As a benefit, student loan assistance programs are certainly still in their infancy— one survey found that only 3 percent of companies offer such a benefit. But experts say that may soon change as companies seek to differentiate themselves in a competitive hiring environment.
“We think student loan benefits are poised to be the next big benefit; similar to what 401(k) matching was when it was first introduced," says Dana Rosenberg, who leads employer and affinity group partnerships at Earnest, a lender that offers student loan refinancing and works with companies to create loan pay-down programs.
The Burden of Student Debt
Such programs could be extremely attractive to debt-laden Millennials. Around 40 million Americans collectively carry $1.2 trillion in student loan debt, and the graduating class of 2015 was the most indebted class in history with an average debt of $35,000 (a superlative they won't hold for long come May 2016.) For employers looking to adjust benefits to correspond to the changing demographics of their employee base, student loan programs hit the mark.
“In 2016, our employees will be 80 percent millennials, and we also hire close to 11,000 employees directly out of school each year," says Terri McClements, Washington Metro managing partner of PwC.
With student debt often preventing young people from participating in 401(k) plans and reaching traditional life milestones, the benefit could potentially make a large impact on employees' financial and personal well-being. A study from the American Student Association found that 73 percent of people with student loans reported putting off saving for retirement or other investments due to their debt, 75 percent reported delaying a home purchase and 27 percent reported it was difficult to buy daily necessities.
“Student loans can be a very stressful thing to deal with, so if we can give our employees peace of mind, that's great," says Caroline Gennaro, corporate communications manager at Chegg.
The Allure for Employers
Student debt assistance programs aren't just attractive to employees, either. Rosenberg says there are significant benefits for the organizations that offer them as well.
“Employers that offer programs to help their employees get out from under their debt load are seeing big benefits: increased retention, more competitive recruiting and, perhaps most importantly, happier employees who have additional cash flow to put towards their life goals," Rosenberg explains.
Rosenberg says happier employees are more engaged employees, who tend to be more productive. Studies show that companies with high employee engagement experience lower turnover and have double the rate of organizational success than their less-engaged counterparts.
Student loan benefit programs may also lead to a more diverse workforce, attracting employees whose financial backgrounds meant they had to take on more debt for their education.
“Diversity and inclusion are also very important to us, so the ability to offer this benefit can help minorities who come out of school with a higher debt burden," says McClements.
A Promising Response
Companies say the response to their student loan assistance programs have been overwhelmingly positive. Chegg has had more than 80 people sign up since they started their program this summer, and they've already eliminated roughly 86 years of collective loan repayments for their employees.
Companies are also finding these programs are a way to differentiate themselves from organizations that may offer more generic benefits.
“As a company in the San Francisco Bay Area, we are always looking to attract the best and brightest in the industry, and this benefit is a big draw," says Gennaro.