Student loan assistance: Have you considered offering it to your employees?

It’s no secret that student loan debt is a hot-button issue for millennials and Gen Z.

The average monthly student loan payment in 2018 was $393, and the median payment was $222. That’s a lot of money coming out of their budgets each month, forcing them to hit “pause” or “remind me later” on some of their most important financial goals.

So, why should your company care?

It’s simple: Millennial and Gen Z workers are the present … and future. They currently account for 38% of the workforce. That number will jump to 58% in the next decade. So, if student loan debt is an issue for this subset of the workforce, isn’t that a good opportunity for your company to meet their needs as you attempt to recruit and retain employees?

Some companies are recognizing the financial challenges of their employees and prospects by offering student loan assistance programs as part of their benefits packages. It could help your company remain competitive in recruiting and retaining workers.

Student loan assistance could help your business remain competitive in attracting top talent.

Are you interested in offering student loan assistance as a company benefit? Here’s a primer on the topic.

What student loan assistance could your company offer?

Generally, there are two ways you can offer student loan assistance to your employees:

1. Education refinance loan: The employer partners with a refinance loan lender at no cost to the employer. In return, employees can refinance their student loans with that lender and receive a principal credit reduction. For example, if the employee refinances $30,000 worth of student loan debt, that lender could give a 1% principal credit reduction, or $300, making their new principal balance $29,700.
2. Employer contributions: The employer contributes money directly to the employee’s student loan principal. These payments can be made every month (such as $100/month) with a lifetime maximum or as a one-time bonus (such as $3,000) applied directly to the loan principal.

Some lenders, like Citizens, also offer student loan assistance in the form of advice. You get access to a tool that lets you see your repayment plan and interest rate with your current lender and your potential education refinance lender. Then, you can see if refinancing makes sense for you.

How does your company benefit from offering student loan assistance?

Now, you might be reading this and thinking, Student loan assistance is great! But what’s in this for us?

Some companies have used student loan assistance as a way to reduce short-term staff turnover, helping to offset high recruiting and hiring costs that come with frequent turnover. So, the company decides to create a program that offers the following:

• $1,000 bonus toward an employee’s student loan principal after 12 months of employment, and
• An additional $2,000 toward an employee’s student loan principal after 24 months of employment

Depending on how many employees you have, this total student loan assistance investment (a lifetime maximum of $3,000 per employee) could actually save your company money if it reduces your short-term turnover cost even more. Maybe your annual short-term turnover costs used to be $100,000 but have decreased to $40,000 since you started the program. That could be a major source of savings!

The other benefit revolves around recruiting new talent. By offering student loan assistance, it’s possible that you could increase your conversion rate on candidates and appeal to more applicants. That’ll help you remain competitive with your peers and could reduce your recruiting costs as well.

What to remember

Remaining competitive in recruiting and reducing turnover costs are great benefits of student loan assistance. But there’s one more perk that we’ve yet to mention, which is much more emotional.

Workers want to feel like their employer cares about them and recognizes their contributions to the company. Student loan assistance is a great way to do that. It’s an opportunity to show millennial and Gen Z employees that the business is looking out for them and trying to make their lives a little easier.

Think about what that could do for company love and morale!

Are you ready to offer student loan assistance?

Citizens offers businesses student loan assistance with its Citizens Student Loan Debt Management Program. With the program, employees can see if a Citizens Education Refinance Loan makes the most sense for them, and if so, they could receive a 1% principal credit reduction up to $1,000 on a new loan.¹