With unemployment rates approaching record lows, it’s a job-seeker’s paradise these days. Candidates looking for work have more options than ever, putting them firmly in the driver’s seat – a far cry from the economic downturn that began to take shape a decade ago. While great for the economy, this does put employers at a disadvantage, as the competition to attract top talent is fiercer than ever. One way you can set your practice apart from the competition is by thinking outside of the box when it comes to benefits. One perk few companies offer that should be high on your list is a student loan benefit.
Student Loan Debt
Student loan debt is at an all-time high; current estimates by the Federal Reserve put the figure at around $1.5 trillion. Some 44 million Americans owe money for their education, and 65 percent are under the age of 40. In fact, seven out of 10 new college graduates owe an average of $37,172. The Congressional Budget Office expects an additional $1.27 trillion in student loans will be added over the next ten years. Clearly, this is an issue that isn’t going away anytime soon. This debt can negatively affect recruitment and retention efforts by employers, and often means reduced employee productivity. Those employers who come up with creative solutions to address mounting student loan debt are likely to attract the attention of Millennials eager to shed some of their burden.
How Concerned is the Younger Workforce?
By 2025, Millennials will make up 75 percent of the workforce. Due to the stress of outstanding student debt, these employees are suffering from health issues and decreased productivity. A survey by American Student Assistance, a nonprofit group committed to eliminating financial barriers to education, indicates the following:
- More than 50 percent of young workers worry about student loans all or most of the time
- 86 percent of employees would make a five-year commitment to a company willing to help pay back their student loans
- 92 percent would contribute to an employer match for student loan repayments
Clearly, it is in your best interest to offer a student loan benefit – especially considering that only about four percent of companies provide such assistance.
Student Loan Repayment Plans
Student loan repayment plans, known as SLRPs, are one approach to attracting talent. Employers who offer this benefit make monthly contributions directly to the employee’s student loan servicing institution while employees continue to make their own payments, a combination approach that can eliminate years from the life of the loan. An added benefit of SLRPs is their ability to promote a more diversified workforce, as we discussed in a blog post last week; traditionally, women and minorities are more likely to incur student debt.
SLRPs are costly – a key factor in their low adoption rates to date. But those companies looking to the brightest and most driven talent would be wise to consider this benefit, which could pay dividends in the long run.