Nearly a third of workers say they’re distracted on the job by financial headaches and, for 44 million Americans, one burden is near the top of the debt heap. Consumers are facing over 1.5 trillion dollars in student loan debt. That’s a trillion with a ‘T’.
Now, more employers are realizing they need to jump in and help by offering a benefit that many consider more of a necessity.
Chatrane Birbal, Director of Congressional Affairs for Health and Employee Benefits Policy for the Society for Human Resource Management, says, “Student loan debt is one of the largest costs that an individual has to absorb in their lifetime.”
Birbal says with unemployment low and competition high, employers know they need to attract and retain workers by helping them where they need it most. She says, “Recognizing that student loan debt is increasing, employers are restructuring their benefit offerings and such offering student loan repayment assistance.”
A growing number of companies are offering student loan repayment assistance including, Abbott Labs, Estee Lauder, Carhartt, Freddie Mac, Staples, and Honeywell.
The programs may differ but Birbal says the goal is the same: to offer some relief to prevent a domino effect. “If an individual has student loan debt, it's very likely that there is going to be long-term effects. For example, your credit rating could be negatively impacted. You might be unable to purchase a car, you might be unable to purchase a home, to start a family. These are things that… could potentially then further impact you in your retirement years,” she says.
Tuition.io, a leading company that helps set up the benefit, tells us student loan debt holders tell them, “‘Help me with what I'm struggling with today’," and that, “They’re less worried about what they'll do in retirement 30 or 40 years from now.” Meaning, they are so saddled with debt, they can’t think about 401(k) savings.
Birbal says employers figure if they can alleviate the pressure, it will help overall financial wellness. She says, “Some innovative employers have made the connection between student loan repayment and saving for retirement... So, this is an opportunity for both employers and employees to have to set up the parameters for financial security later in life.”
One important note: Currently, if your employer does offer you student loan repayment assistance, it must be claimed as taxable income. The Society for Human Resource Management is advocating for an amendment to the tax code to make the benefits tax free, similar to tuition assistance.
Also, this is far from a millennial issue. Between 2012-2017, student loans for older Americans jumped 20 percent.