At the 2019 SHRM conference, Gradifi’s Chief Marketing Officer, Meera Oliva discussed the fact and fiction of student loan benefits with Jane Fontaine, SVP of Human Resources at DCU and Chad Carter, VP of Benefits at Fareway Stores. Student loan debt has more than doubled over the last 10 years, which could explain why student loan repayment benefits are now seen in eight percent of organizations, up from four percent in 2016.
In their discussion at SHRM, Meera, Jane and Chad debunked some of the common myths associated with student loan benefits and provided insight as to why it is important to provide a benefit like this, and what you need to know about the impact it can have on your employees.
Myth No. 1: A student loan benefit won’t have a significant impact on employees.
The truth: In a competitive workplace environment, getting a higher education is one of the best ways to ensure secured employment for the future. Unfortunately, doing so has never been more expensive, and 70% of the graduating class of 2018 graduated with student debt. This means much of the workforce is dealing with paying down their student loans while still trying to save for retirement, start a family and buy a home. In fact, many graduates report that student loan debt is a major factor in holding off on these other financial goals, and 80 percent of working professionals with student loan debt consider it to be a source of significant or very significant stress. In turn, this stress contributes to approximately 12 to 20 hours of lost productivity per month. By putting programs in place to help curb that stress, employees can alleviate some of that financial burden as they see their loans get paid up to 30% faster and help put employees back on track.
Myth No. 2: Employees without student loan debt will be upset by a benefit that doesn’t apply to them.
The truth: Although employees without student loans might not appear to be directly impacted by a student loan repayment program, they too will reap some benefits. Jane Fontaine, SVP of Human Resources & Training at DCU, shared at SHRM that “Gradifi was important to implement because it aligned with our culture and it speaks to the evolution of our benefits package. We saw very little push back and more people were proud to work for an organization that is tackling such an important issue”. Providing a form of financial relief to employees benefits the entire workplace by creating a workforce of less stressed, happier and more focused employees overall. Case in point: 53 percent of Gradifi members report feeling less stressed about their student loans because of their employer contribution, which could lead to more involved, connected colleagues.
Myth No. 3: We can wait to offer this benefit until other companies are doing it.
The truth: To get in on the ground floor of an innovative way to assist employees with one of their largest financial burdens, now is the time to move. Offering unique benefits like this differentiates you by becoming an employer of choice among the workforce is becoming more important to job seekers and employees. Businesses can study what other companies have already offered and evolve those practices to better suit their own needs. For example, the fortune 500 engineering firm AECOM not only offers student loan refinancing, but they couple that with student loan counseling and financial wellness content for a more complete financial package. Meanwhile, car buying e-commerce company Carvana offers up to $1000 per year in student loan payments to full-time employees, while Sotheby’s contributes $150/month toward student loans indefinitely until the employee is no longer in debt, including parents who have taken on debt for their kids.
Myth No. 4: We should wait until the tax laws change to offer student loan repayment.
The truth: Changes to the tax law are already being discussed and starting your program now will only put you ahead of the curve. Gradifi recently endorsed the Employer Participation In Repayment Act, which is bipartisan legislation to expand the employer-provided educational assistance program to include student loan repayment and would allow employers to offer student loan repayment assistance up to $5,250 per year while excluding that contribution from the employee’s gross taxable income. While Gradifi is hopeful that Congress will pass this legislation, there are no guarantees. Chad Carter commented about the tax legislation during the presentation saying “We knew doing something like this now was going to be an easy sell to leadership, mattered to our workforce, and promoting this benefit is something that gives us a competitive advantage.”
Myth No. 5: This will cost too much.
The truth: Funds dedicated to student loan repayment programs is money well spent. Offering student loan repayment as part of an overall attractive benefits package doesn’t have to break the bank, but it will help you build a talented and loyal employee base. One way to help curb the costs of this benefit is to start by offering it to a certain level of employees only. For example, Fareway, a small grocer in the Midwest, put together a simple program offering $5,000 in total benefits to be paid out over $100/month. The package is only being offered to full-time employees to start. This allows the company to test the waters and gauge impact. So far, 150 employees are participating, which not only helps them financially, but also incentivizes them to stay onboard. Recruiting and training new talent is a costly endeavor for a business, so retaining educated staff by offering a benefit that really helps them out essentially pays for itself. The proof is in the numbers: 76 percent of employees say that their choice to accept a job would be considerably impacted by an employer’s willingness to offer a student loan benefit, while 74 percent of Gradifi members reported that they are more likely to stay at their current employer because they offer a student loan benefit.
At the end of the day, a company is only as good as its employees, and employees are more likely to be attracted to companies that take their concerns seriously. Gradifi helps assist employers to gain a competitive advantage and retain talent through simple and flexible plans for repaying employee student loans. We will be hosting an encore presentation on Thursday, August 22, 2019 at 2:00 pm EST. To register sign up here and to learn more visit https://www.gradifi.com/or contact Gradifi at firstname.lastname@example.org