As the national student debt balance grows, more and more companies are beginning to consider student loan repayment programs as a way to attract top talent. First, let's talk about the student debt problem.
According to consulting firm Student Loan Hero, a 2016 graduate will leave school with about $37,000 of student loan debt, an increase of six percent over 2015.
Consider the effect of such debt. To pay it down will take a chunk out of after-tax income. Every dollar spent on debt isn't going towards saving for retirement, or a down payment for a home -- two areas where young professionals can begin to build equity.
Certainly, there is value in schooling, and the return on that investment can be quite clear over time. But the slog of paying down debt cannot be ignored.
There are increasing signs companies are beginning to look more closely at what they can do to aid the student loan repayment process as an employee benefit. Vendors such as Peanut Butter and Gradifi are working with companies to set up automated payment systems for employees.
The upside to a corporate student loan repayment program? For one, it's still far from a standard perk, and companies could use it as a recruitment tool, especially when it comes to attracting talent right of college. Secondly, helping to reduce debt could, in turn, reduce the stress of dealing with a sizable school bill.
The downside to a student loan repayment program? At the moment, any contribution given to employees would be treated as income. For example, a $300 monthly stipend wouldn't go as far as planned.
Still, for recent graduates, any help paying down debt wouldn't go unappreciated. As 2015 ended, the unpaid U.S. student loan balance had reached $1.23 trillion, according to the Federal Reserve Bank of New York.
Can student repayment programs work for your company? Contact a Plexus Groupe employee benefits client executive by calling847-307-6100 (Deer Park, Ill.), 312-606-4800 (Chicago), 972-770-5010 (Dallas) or 405-840-3033 (Oklahoma City). Let's a conversation about solutions for this very real issue facing so many in the workforce.