How companies are helping offset student loans for employees
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How companies are helping offset student loans for employees
An envelope sharing the return of student loan payments.
More than half of all college graduates finish school with student debt, with the average amount per borrower nearing $30,000. Now that the Supreme Court has rejected President Joe Biden’s student loan forgiveness plan and the new repayment plan has yet to take shape, many borrowers are struggling to map out how to pay back what they owe.
Legislative solutions to the national student loan debt crisis range from debt forgiveness to capping students’ borrowing power, but alternative solutions have also cropped up—including student loan payment support from your employer.
Tovuti LMS researched strategies companies across the U.S. implement to help employees pay or offset their student loan debts. From tuition reimbursement for ongoing education to paying for existing student loans, companies across the U.S. are adding student debt-focused benefits to their compensation packages to attract top talent.
Types of employer-led student loan support
According to the Society for Human Resource Management, education benefits from employers have been on the rise in the last several years, as they have proven to be a valuable way to attract and retain top talent.
This news is excellent for employees struggling with education payments, but the exact form of this assistance varies by company.
For instance, tuition assistance is a well-known education perk that can reduce student debt accrued. Essentially, a company will cover all or part of the cost of classes a worker takes while employed, expecting it will make them better at performing their jobs. This perk has some drawbacks, including not typically addressing pre-existing student loan debt. Additionally, most companies will include stipulations on the courses that qualify for this benefit, such as how long someone must work at the company to be eligible.
Companies offering tuition assistance include the following.
- Starbucks—100% paid tuition for eligible programs at Arizona State University
- Chipotle—100% paid tuition for select programs and up to $5,250 per year for other programs
- Capital One—Tuition reimbursement for employees plus college coaching for their kids
- Target—Tuition-free education options from select partner schools
- UPS—Tuition assistance up to $5,250 per year ($ 25,000-lifetime cap) with no course restrictions
A more direct form of student-debt support some employers are taking is student loan assistance, which takes the form of additional payments to an employee compensation package and can come with tax benefits for the employer.
Employers can either match payments made directly to the employee’s loan provider or provide additional compensation allocated to loan payments at the employee’s discretion. Like with tuition assistance, employee eligibility can vary.
Companies offering loan payment assistance include the following.
- Google—Up to $2,500 per year
- Fidelity—Up to $15,000 in student loan contributions
- U.S. government—Forgiveness on federal student loans after meeting years of service and payment requirements
- Chegg—Up to $3,000 per year
- PwC—Up to $1,200 in loan payments
Another unique way companies will support student loan payments in the future is by increasing the amount of money added to employee retirement plans. Thanks to the Secure 2.0 Act, starting in 2024, employers can match contribution amounts based on the amount of an employee’s student loan repayments, rather than just their 401(k) contributions. That allows employees to contribute payments to student loans without worrying about sacrificing their retirement savings at the same time.
Will student loan help become a new standard employer benefit?
A 2023 Forbes study found that 40% of employers believe workers left their jobs for better benefits. That means shoring up perks will be crucial for companies to keep the most qualified candidates.
With student loans adding a heavy financial burden to so many, it’s no surprise employers are addressing the problem. But only time will tell if student loan assistance becomes a more standard company benefit or if legislative solutions will eliminate the need for such programs.
Story editing by Jeff Inglis. Copy editing by Kristen Wegrzyn.
