Recruiting can be brutal. Not only must you acquire top industry talent, you need to retain your employees long-term. This can be difficult, especially when it comes to millennials who have a penchant for chronic job hopping. One benefit that’s gaining ground is student loan forgiveness.
An Enticing Proposition
A significant number of Americans are plagued with student loan debt. The College Investor points out, “Roughly 43 million people have student loans, and the U.S. workforce is roughly 144 million people, which means almost one in three workers have student loans.” In theory, a third of potential new hires have student debt they need to pay off.
You can bet that student loan forgiveness looks very appealing to many job seekers, especially millennials. A survey from Student Loan Hero found that nearly 46 percent of employees would prefer student loan payment assistance over a 401(k) retirement plan. This number is even higher among 18 – 24-year-olds where 54 percent would choose this option. If you’re specifically targeting younger employees in your recruiting efforts, this can give you an upper hand over competitors.
Companies Offering This Benefit
At the moment, only three percent of companies currently offer student loan forgiveness. Some notables include Chegg, Fidelity, and Kronos. However, it’s definitely a trend that’s catching on. More companies are realizing that there’s a genuine need for financial assistance, and it’s something that many job seekers respond to. Forbes even lists student loan forgiveness as the hottest benefit of 2017.
Lawmakers Take Notice
As of now, there is only tax-free tuition reimbursement but no tax-free student loan repayment. However, this may change in the near future as a bill was recently introduced in early January 2017 called The Student Loan Repayment Assistance Act of 2017.
The act enables employers to make tax-free repayments of their employees’ student loans as well as provide a business-related tax credit. With the cost of higher education being at an all-time high, lawmakers are working to provide relief in any way they can. This added incentive would make loan forgiveness even more popular among companies.
Is It Right for Your Company?
It’s safe to say that this could be a smart move if your company is looking for an edge in recruiting. It should be especially effective if you’re looking to recruit bright young talent. With such a small percentage of companies currently offering this benefit, it can make your company stand out from the pack.
The great thing about student loan forgiveness is that it can also be structured to improve retention. An example is Natixis Global Access Management, which pays a lump sum of $5,000 to employees who have been with the company for five years and $1,000 annually for up to five more years. Of course you can create your own terms, but this just shows how this benefits aids in both recruiting and retention.
It will be interesting to see how offering student loan forgiveness as a benefit will play out. Although it’s only currently offered by a small number of companies, it’s likely to catch on, especially if the Student Loan Repayment Assistance Act of 2017 is passed.