Percentage of Employers Offering Student Loan Repayment Benefit Doubles

The percentage of U.S. employers who provide student loan repayment assistance to employees has doubled. Employers are now twice as likely to offer a student loan repayment benefit as they were just a year or two ago, according to a survey from the Society for Human Resource Management (SHRM).

While SHRM data records the number of respondents offering this benefit had held steady at 1 in 25 employers for 2015-2018, this year’s survey saw the number double, from 4% to 8% of employers responding.

Indeed, a 2017 survey from American Student Assistance (ASA),  found that 86% of those surveyed would commit to staying with their employer for five years if their employer helped them with student loan repayment. The same survey also found that student loan repayment was the third most desirable employment benefit, behind only major medical and 401(k) matching contributions.

More recently,  a survey from Abbott Labs broadly confirmed the ASA results. They found that more than 9 out of 10 employees surveyed say it’s important to find employers who provide help paying off student loans.

Abbott Labs also found that more than 6 out of 10 adult workers with student loans would consider switching to a company with a student loan benefit.

Abbot Labs puts their money where their mouth is: They themselves offer a competitive student loan repayment benefit, which the company calls its “Freedom 2 Save” Program.

Abbott Laboratories is widely believed to have received this private letter ruling from the IRS giving them the green light to make employer contributions to their employees’ 401(k) plans they sponsor, even if the employee was making student loan payments and not contributing anything to the company plan.

Employer Adoption of Student Loan Repayment Benefits Jumps

We had been expecting SHRM to show the needle moving for some time: With the student loan crisis very much top-of-mind in the news cycle, and new employers announcing different variations of student loan repayment benefits nearly daily, the SHRM surveys indicating that just 4 percent for the past three years in a row was starting to strain credulity.

Finally, SHRM’s methodology managed to capture the steady growth in the number of employers offering student loan repayment assistance as an employee benefit – growth that had remained below the radar for several years.

Another recent survey from business consulting firm Willis Towers Watson found that a third of employers – 32 percent – plan to roll out a student loan repayment benefit by 2o21. 

Similar numbers of employers are also planning to introduce other student loan-related benefits:

  • The number of employers offering counseling services for student loan refinancing or consolidation is set to nearly quadruple – from 10% to 37%.
  • Employers offering student loan refinancing is expected to increase by 250%, from 1o% to 35% of employers.
  • The number of employers offering a student loan consolidation benefit is expected to quadruple, from 8% to 32%
  • The number of employers offering college counseling for the children of employees is set to triple, from 11% to 32%.

Clearly, the battle to recruit and retain millennial talent is ramping up as employers sweeten their total benefits package.

It’s not just Millennials and GenZ

Student loan repayment benefits are popular among employers seeking to recruit Millennials and recent college graduates. But employers shouldn’t overlook the appeal of student loan repayment benefits for older workers. About 35 percent of those with student loans are aged 40 and older, according to data from the Federal Reserve. They owe about a third of the debt outstanding – much of it for graduate school, or in Parental PLUS loans they took out to help their own children attend college.

Other Benefits Gaining Popularity

Paternity leave, standing desks, and telecommuting benefits also saw strong growth, while employers tightened their belts on some kinds of workplace wellness benefits, according to the survey.

Companies are also conducting extensive research on their specific employee demographics to find a unique benefits package that resonates with the majority of their employees’ needs and stage of life.
“Finding the right combination of benefits that appeals to a multigenerational workforce can be a challenge,” said Alex Alonso, SHRM-SCP, chief knowledge officer for SHRM. “But if you know a good portion of your workforce are Baby Boomers with aging parents, you might choose to beef up your caregiving benefits and flexible scheduling policies. On the other hand, if you have a young demographic, offering benefits like student loan repayment could be the way to go.
“Health care costs are eating up a good portion of employer benefits budgets, so employers aren’t choosing to make many new changes,” he explained. “It’s really about incorporating the higher health care costs and doing what you can with the rest of your benefits budget to meet employees’ needs.”
Meanwhile, another very recent survey from SHRM found that a majority of job seekers now considers student loan repayment assistance to be a factor in deciding where they want to work. This means that in today’s competitive market for the best talent, it’s getting more and more important to offer some form of student loan repayment benefit as a differentiator. Especially if you want to recruit younger talent, as today’s average college graduate with debt is leaving school with over $30,000 worth of student loans.
Other SHRM findings:

Family-Friendly and Wellness Benefits: 

  • Standing desks continue to rise in popularity. Currently, 60 percent of employers offer this benefit, compared to one-quarter just five years ago.
  • Company-provided dependent care flexible spending accounts have declined 8 percentage points since last year.
  • Onsite lactation/mother’s rooms are offered by 51 percent of employers, up 16 percentage points from 2015.
  • Pet insurance is rapidly gaining acceptance among employers.

Leave and Flexible Working Benefits: 

  • The number of employers offering family leave above the time required by the federal Family and Medical Leave Act increased by 6 percentage points. Additionally, while paid leave for new fathers has gone up only slightly since 2018, it has seen a steady rise over the past five years (up 14 percentage points) and is now within 4 percentage points of paid leave for new mothers, the most common type of paid leave for new parents.
  • Telecommuting on a part-time basis is on the rise, now offered by 42 percent of employers. Flexible working benefits continue to rise in popularity, and, as a result, telecommuting of all types is increasing, as are most types of flexible scheduling.

Health Care and Health Services.

  • Telemedicine and telehealth increased by 10 percentage points within the past year. Additionally, telemedicine benefits have increased from 23 percent in 2016 to 72 percent this year.
  • PPOs continue to be the most popular health insurance option, available in 85 percent of organizations, followed by high-deductible health plans linked to a savings or spending account, available in 59 percent of organizations. Offerings of high-deductible health plans that are not linked with an HSA or HRA decreased by 10 percentage points since last year.
  • A Towers Watson Survey found that a third of employers expect to offer a long term care insurance benefit for employees by 2021. This would double the current percentage offering this coverage.
  •  The percentage of employers offering critical illness/dread disease insurance benefits is set to expand from 43%  to 71%.

Investment and Retirement Benefits. 

  • Company-provided student-loan repayment benefits have risen from 4 percent in 2018 to 8 percent in 2019. This category is expected to gain additional traction if pending federal legislation is passed.
  • Employer-provided charitable donations are down over the past five years, but more than one-quarter of organizations now provide paid time off for volunteering to meet the demands of workers who value corporate social responsibility.

Programs and Services Benefits.

  • The number of companies offering relocation lump-sum payments increased by 6 percentage points over the past year. However, housing and relocation benefits overall, which were once common for many organizations, are now offered at less than one-third of organizations.
  • Employees keeping hotel points and frequent flyer miles were both notably lower this year than in 2018. Reimbursement for personal phone calls while on business travel also decreased by 9 percentage points.

You can read the full SHRM report here.

 

How the Employer Student Loan Repayment Assistance Program Can Benefit Every Single Employee in Your Company

 

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