Your guide to a better future
Eighty-five percent of workers say they’d leave their job for a company that helped them with their student loans.
Dan Avery
Writer
Dan is a writer on CNET’s How-To team. His byline has appeared in Newsweek, NBC News, The New York Times, Architectural Digest, The Daily Mail and elsewhere. He is a crossword junkie and is interested in the intersection of tech and marginalized communities.
Now that the White House has unveiled its student loan forgiveness program and announced the last extension of the payment pause, borrowers have a clearer picture of the financial burden they’re facing.
President Joe Biden’s plan cancels $10,000 in debt for individuals earning less than $125,000 a year (or $20,000 if they have a federal Pell grant).
That’s expected to wipe out the balances of almost a third of the 45 million Americans currently holding federal student loans, but many borrowers will still head into 2023 under a cloud of debt.
Help could come from an unexpected source: Their bosses. A growing number of employers are offering student loan assistance as a job benefit to lure — and keep — top talent.
Kristen Carlisle is general manager at Betterment at Work, which offers student loan management resources in addition to traditional 401(k) services. Carlisle said the number of companies providing student loan benefits is on the rise.
“It’s becoming more common — not just among Fortune 500 corporations, but midsize and smaller companies too,” Carlisle told CNET. “Employees are asking for it. Bottom-up demand is shaping the narrative.”
Betterment is one of a handful of companies that offer student loan benefit solutions, alongside SoFi at Work, Gradifi and Tuition.io.
According to Betterment’s research, 57% of employees believe their bosses should help them pay off student debt. And 85% said they’d leave their current job for a company that offered more financial support for student loans.
“Employees have more leverage than ever, so employers are rushing to stay competitive,” Carlisle said. “New entries in the job market have new needs and the market needs to respond to that.”
There’s a range of options for companies looking to provide help with student loans, from financial counseling and debt consolidation to matching payments akin to tuition reimbursement.
There’s no one-size-fits-all solution, Carlisle said, and it’s worth inquiring what a prospective employer’s student debt offerings are.
Since 2020. Google has been matching employees’ student loan payments up to $2,500 a year.
The number of companies offering student loan benefits is small but growing and contains some notable names: Since 2016, Aetna has been matching student loan payments up to $2,000 per year for full-time employees, with a lifetime maximum of $10,000.
Estée Lauder, Peloton, Live Nation and Staples will all contribute $100 a month toward your student loans, with various caps on dollar amounts and length of involvement.
Working with Gradifi, Carvana contributes up to $1,000 annually to pay down the student loans of full-time employees, while Google began matching staffers’ student loan payments in 2020, up to $2,500 per year.
Benefits provider Goodly has a searchable database of employers that offer student loan assistance, as does remote-job listing site Flexjobs.
Some employers, like Google, attach no strings to the benefit. Others have certain stipulations, like a minimum tenure on the job. Still, 86% of workers said they’d stay at a company for five years if it meant being able to take advantage of a student loan repayment program.
Employees aren’t shying away from frank conversations with their bosses about their student loan burden, Carlisle said.
“Providing information to your employer and benefits provider can only help bring you to financial freedom,” Carlisle said. “Go to your People team and ask them if they’re thinking about it. Explain why it could help the entire company and maybe come to the table with some provider names.”
Craig Copeland, director of wealth benefits research for the nonprofit Employee Benefit Research Institute, said there was major interest in student loan benefits before the pandemic.
“COVID kind of paused everything, with companies focused on emergency situations and health care,” Copeland told CNET. “Now, the focus is coming back around.”
Uptake is still slow, and legislation is only now coming that makes it easier for companies to provide student loan repayment assistance, he said.
From 2014 to 2016, only 4% of companies offered such benefits, according to the Society for Human Resource Management, a figure that doubled to 8% in 2019.
Tuition reimbursement remains a much more common perk, offered by 71% of employers according to data from U.S. News & World Report. In large part that’s because, until recently, student loan assistance wasn’t eligible for a tax break the way tuition reimbursement is.
The 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act finally allowed employers to make untaxed contributions of up to $5,250 each year toward employees’ student loans — a benefit that’s since been extended through 2025.
Only 8% of employers offered it in 2020, though.
The 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act allows workers to set up tax-advantaged 529 accounts of up to $10,000 a year for student loan repayments. But, according to the Society for Human Resource Management, only one in 10 employers offer these accounts — and only one in 100 contributed in 2020.
Now before Congress, the SECURE Act 2.0 would finally change financial regulations to allow employers to make tax-exempt 401(k) contributions that directly match their workers’ student loan payments.
SECURE Act 2.0’s passage would allow people whose student debt is keeping them from putting money away for retirement to begin saving, said Laurel Taylor, CEO of Candidly, which offers student-debt solutions.
“College graduates with student debt, on average, have half the 401(k) balance of their debt-unburdened colleagues because they are forced to delay saving,” Taylor told SHRM. “This would rectify that inequality.”
SHRM expects “a ramping up” of employers offering this benefit, according to its 2020 employee benefits report. In a job market that favors workers, It can be a way for employers to stand out.
“Education benefits are ripe for expansion, as employers could see real advantages in talent acquisition and retention by being early adopters of these relatively rare but popular offerings,” the report read.
Nearly half (48%) of employers either offered student loan assistance or planned within the next two years, according to an October 2021 survey of 250 firms by EBRI.
Of course, not all workers have student loans, and financial education benefits may take various forms.
“It could be a college savings accounts for employees who are parents,” Copeland said.
Right now, student debt consolidation plans are the most common benefit, mainly because they don’t require employers to make continuous contributions.
“You’ll probably get a better interest rate,” Copeland said, referring to debt consolidation. “The downside is that your loan will be privatized,” making it ineligible for any future payment pauses or debt forgiveness by the federal government.
“You just have to understand what you’re getting into,” Copeland added.
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