With the pause on federal student loan payments ending in less than 90 days, many workers are under growing financial pressure — and employers are taking notice.
That’s driving more companies to enhance the benefits they offer, especially when it comes to college affordability.
In fact, in today’s job market, student loan repayment and tuition assistance may be two of the best incentives when it comes to attracting and retaining talent.
Student loan repayment
Before the pandemic, about 8% of employers offered student loan repayment assistance as a benefit, according to a 2019 survey by the Society for Human Resource Management.
Now, 17% of employers, including Aetna, Fidelity and PwC, offer student loan debt assistance and another 31% plan to offer it, according to the Employee Benefit Research Institute’s 2021 Employer Financial Wellbeing Survey.
Incentivized by tax breaks, the burdens of Covid and collective student loan debt surpassing $1.7 trillion, “in the last two years, it has really picked up,” said Stacey MacPhetres, a senior director of education finance at EdAssist Solutions, a division of Bright Horizon focused on workforce education.
EdAssist works with companies like Orlando Health, Aetna and Volkswagen Group of America to offer employees student loan reimbursement.
As the student loan payment freeze nears an end, “we are already starting to see greater numbers of employers reaching out to implement the programs,” she said. “The demand is pretty significant.”
Of course, employers paying for their employees to get a degree is not new. For decades, businesses have picked up the tab for white collar workers’ graduate studies and MBAs.
However, many companies are now extending this benefit to front-line workers — such as drivers, cashiers, and hourly employees — as well as heavily promoting the offering more than they have before.
For employers, education-as-a-benefit is a cost-effective addition to core offerings and it adds “to the stickiness of the employee,” Willis Towers Watson senior director Lydia Jilek said.
Chipotle chief financial officer Jack Hartung told CNBC in April that employees who take advantage of the company’s free degrees are 3½ times more likely to stay with the company and seven times more likely to move up into management.
Despite a strong desire to go back to school, less than half of employees said they have been able to pursue educational goals in the last five years, mostly due to the time commitment and financial obstacles, according to research by EdAssist Solutions.
The struggle is even greater among minority groups, EdAssist Solutions found.
To that point, 44% of Black employees said they are having trouble affording education, compared with 29% of white employees. There’s a similar discrepancy among men and women. Roughly 36% of working women report financial barriers to education, compared with 22% of men.
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To find out if your employer is offering any sort of help, do your homework, advised EdAssist’s MacPhetres.
Although, “student loan repayment is the holy grail,” there may be other offerings that are nearly as valuable, such as access to financial advisors or student loan coaching.
And, be proactive, MacPhetres said. Just because your company doesn’t offer student debt repayment or tuition assistance, doesn’t mean they aren’t open to it.
“When workers bring it to the table, employers tend to be fairly responsive,” she said. “Don’t be afraid to suggest it, enough squeaky wheels can create some buzz.”