I Want To Provide Student Loan Repayment Assistance To My Employees

The Right Thing To Do: A Moral Argument for the Employer Student Loan Repayment Assistance Program

I feel the need to make an argument for the employer student loan repayment assistance program beyond the usual it’s-good-for-business response. It is good for business, but it’s also more than that. The hard focus on profit seems to make employers uncertain about whether this program is a worthwhile investment. I can’t blame them for having questions. These are businesses, after all, and not charities.

Questions, questions, questions!

The program itself is relatively new. Not many businesses offer it yet. On top of that, there are no tax incentives for this kind of benefit. There has to be some financial benefit to every corporate action or lack thereof. Does it really make an impact? Is the employer student loan repayment assistance program worth it?  The answer to both questions is, of course, that it depends.

It depends on many things. It depends on how the program itself is structured and implemented. It depends on the personal lives and private financial circumstances of the employees who participate. It depends on the recruitment, retention, and engagement goals of the employer in implementing the program and how progress towards those goals are monitored and measured. There are several ways to gauge success.

The Big Why?

Ultimately, though, it depends on the employer’s philosophy behind adding such a program to its menu of benefits – the real why.  Sure, meeting recruitment goals is important. Saving money by decreasing employee turnover is vital to the financial health of a business. These are excellent reasons for a company to implement such a benefit.  But, there’s more to it than even that.

In order to understand the scope and importance of the repayment assistance program, it is helpful to have a basic historical knowledge of how and why employee benefits became such an integral part of the American workforce. Employers have extended benefit programs to their employees since colonial times.

A historical perspective

In 1636, the Plymouth Colony settlers had a military retirement program.  In 1797, Gallatin Glassworks implemented a profit-sharing plan for its employees.  American Express Company had a private employer pension plan back in 1875.  In 1910, Montgomery Wards offered group health, life, and accident insurance to its employees.  Baylor University Hospital formalized their prepaid group hospitalization plan in 1929. Then, in 1935, the government got involved in the provision of such benefits when Congress mandated basic retirement income protection through the Social Security program.  This served to expand coverage. In 1956, Congress included income protection for disabled workers.  Health insurance for the elderly and disabled was added in 1965 through the Medicare program.

At the same time that this was happening, federal tax breaks for these benefits kicked into effect while tax rates were on the rise. The tax incentive to offer these types of benefits served to make them more prevalent in the country than ever before.

Today, employers (and employees) tend to view discretionary employee befits programs through the lens of human capital management. They are simply ways to enhance the employer brand of the company. The better the benefits package, the more likely people will want to work at the company (and stay with the company). Initially, though, employer branding, though an attractive side effect of offering employee benefits, was not in the true spirit of the programs.

The true spirit of employee benefits programs

Employee benefits were offered to help ensure the economic security and to raise the living standards of its employees. In other words, they did it because it was the right thing to do. Shocking, I know. A business doing something for reasons other than profit? Insanity! Nonetheless, that was the case. The Pilgrims of Plymouth Colony certainly didn’t have to help their military veterans – those men and women who got wounded in defense of the colony. They did it because it was right. By offering the benefit, they were helping people in need.

Eventually, employee benefits came to play into the larger social and political goal of promoting economic stability and boosting the economy of the nation by securing the welfare of its workers. The government supports such measures in the form of favorable tax treatment. Perhaps we can think of it as a sort of partnership. Employer, employee, and government. Each plays a vital role in making the economy work.

The employer’s role in solving the student debt crisis

Employers are in a unique position to be able to help with these social issues, now including the student debt crisis. You can even make the argument that, on some level, employers have an obligation to help with student debt. After all, people take on the debt in order to work for them. News flash: college students aren’t doing it for kicks. Students attend college predominantly for the purpose of future employment. They want a good job. That’s why they go to school.

For many – if not most – employers, having an education is a requirement. It’s a barrier to entry. When you consider that most people who go to college have to take on student debt (over 70% of college students must take out loans to fund their education), you really have to ask yourself whether employers don’t have some obligation to help with the very problem they are, in a certain sense, proliferating.

The right thing to do – peace, harmony, and love!

I think I wrote it in my bio: I’m sort of a hippie at heart. I believe we should be kind to each other. We should help each other when we are able. I personally think every employer that can afford to offer taxable benefits for its employees should offer the student loan repayment assistance program as an option. Not everyone will participate. Not all employees will be able to reap the benefits of such a program. But, my guess is that some of them can. Those employees may end up shaving years off their repayment schedule.

It’s great that employers can recruit more effectively by implementing such a benefit. It’s great that the program reduces turnover and employee stress, thereby saving the company thousands of dollars. But, when you can say that your actions as an employer helped allow someone get out of debt and start a family, buy a house or a car, or save for retirement, then maybe you’re not even thinking that you did it for the money. Maybe you’re thinking, I did it because it was the right thing to do.   

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