Employer help with student loan debt is a huge draw for millennials

Like millions of her peers, Nicole Read graduated with thousands of dollars in debt. Unlike most of them, she receives direct help from her employer to reimburse him.

(Read more: Advisors step up efforts to help clients manage student loan debt)

The 26-year-old’s job at event organizer Live Nation Entertainment in Beverly Hills, Calif. Comes with a benefit that may start to be felt in American businesses: contributions to her bills. student loan. Providing such an incentive helps companies attract potential employees as they grapple with tense labor market conditions marked by an unemployment rate close to its lowest in nearly five decades.

In Ms. Read’s case, it’s $ 100 per month. As a result, “I’m paying about $ 30 more than my minimum payment each month, which has allowed me to pay my interest a little faster,” she said. “It just gives me a little leeway.”

Such plans are spreading. They were offered to staff around 8% of U.S. employers in 2019, more than double the 2015 level, according to an April survey by the Society for Human Resource Management.

Another study by business consultant Willis Towers Watson found that 32% of companies plan to introduce a similar benefit by 2021.

“If you have a young population, offering benefits like paying off student loans might be the way to go,” said Alex Alonso, knowledge manager for SHRM.

The fierce competition for talent and the high debt burden for a generation of Americans entering the workforce are driving the change. Millennials make up more than half of Live Nation’s U.S. workforce.

The outstanding student loan balance reached $ 1.6 trillion at the end of the first quarter, and more than a quarter of that amount is held by people under the age of 30. The effects spill over into their social and economic lives, making it harder to start a family, buy a house or buy expensive items, research finds.

The federal government is considering giving businesses a break to help employees get into debt.

The Employers’ Reimbursement Participation Act, introduced in the House and Senate in February, would provide tax relief to companies that do so. It has bipartisan sponsors, including Democratic presidential candidates Seth Moulton and Amy Klobuchar.

Other Democratic candidates, like Senators Bernie Sanders and Elizabeth Warren, have offered more sweeping fixes that include canceling loans.

“Helping employees get out of debt faster is a win-win solution, both for the employee and for our productivity,” said Katie Wandtke, director of human resources at Cybrary, a college park-based cybersecurity company, in Maryland.

It’s not just small stores that benefit. Large companies, including the professional services center PricewaterhouseCoopers, are also grabbing hold of it.

(Following:What Advisors Need To Know About Working With Student Loan Debt)

Live Nation began offering this benefit in early 2017 and has helped employees save over $ 4 million. More than 80 of the company’s employees have been able to repay their loans in full, according to Live Nation.

The event organizer is working with the startup Tuition.io, which specializes in helping businesses set up such programs and has clients like Fidelity Investments and Staples. There are also other platforms on the market, including Goodly, which works with Cybrary, and Gradifi, used by PwC since 2016.

Paying $ 30 more per month than the minimum, as Ms. Read says she does with the help of her employer, makes a difference.

For example, for a loan of $ 50,000 at 5% over 10 years, this would save almost $ 1,000 in interest over the life of the loan, which would allow the borrower to liquidate the slate eight months longer. early.

“Jobs in the entertainment industry like this aren’t necessarily well-paying jobs,” Ms. Read said. “So that kind of help makes up for that difference in salary and it’s really helpful for people like me. “

Comments are closed.