Looking to Attract and Retain Millennials through Employee Benefits?
Offer a Student Loan Assistance Program
Not to be confused with tuition reimbursement programs, student loan assistance programs are a relatively new benefit which allows employers to pay a flat, designated dollar amount towards their employees' student loans on a monthly basis (usually about $50-$250 per month).
The benefit is growing in popularity among employers with a high number of college educated millennials, many of whom have staggering student loan debt. These programs have been shown to significantly reduce turnover which reduces costs for hiring, training and onboarding.
Peanut Butter, a technology firm specializing in the administration of this benefit, recently conducted their Millennial Benefits Preferences Study, a survey of 400 employees across the U.S. in a broad range of fields and all between the ages of 20 and 35. In the survey, it was discovered that on average:
- Respondents prefer this benefit over 7x more than free food or gym memberships
- 85% said they would accept a job if this benefit was offered
- 36% said that they would be willing to stay at a job longer
- Respondents found this benefit 2x more valuable than 401(k) and health insurance contributions from the employer
It’s important to note this is still considered a non-qualified benefit which means:
- Currently, there are no limits on annual reimbursements from the employer
- Employers can set the amount and level of reimbursement to be different for each class of employee that’s eligible
- It can be offered to specific classes of employees (talent, entry level positions, etc.)
- Benefit is taxable although, as of this blog post, there’s legislation pending that could change this and make the benefit non-taxable, but it could also impose annual limits on reimbursements in the future
Most reputable administrators of this benefit can do so for approximately $4-$6 per participant per month (PPPM). Using a third-party administrator has the following benefits:
- Oversees plan design, benchmarking and set-up
- Enrolls employees
- Verifies loans for each employee
- Makes direct deposits to banking institutions on behalf of the employer
- Secures data and payment transfers
- Completes administration with employee support
Still need some convincing that this benefit is the right fit for your organization?
- Talk to potential administrators of student loan assistance programs about providing a ROI calculation to estimate the financial benefits for your company
- Consider starting with a guidance-only solution that gives employees the tools needed to manage their own student debt; employee engagement will be lower than with a student loan assistance program, but you can still be among the first in your market to offer this type of assistance
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