After getting an undergraduate degree at Georgetown and an MBA at New York University, David Carter was heavily indebted. When he started working at CommonBond, a company based in New York that refinances student loans, he had more than six figures of debt.
Carter was pleasantly surprised when, in 2016, the company announced it would offer $100 per month to help employees repay student loans.
“I expect to pay back my student loans nearly a year earlier than I originally planned,” David says.
CommonBond isn’t alone in its desire to help employees repay student debt. Christiana Lu, the director of benefit consulting at the human resources and benefits platform Namely, cites two recent reports showing that while only 4 percent of employers currently offer student loan repayment benefits, around 21 percent of companies are considering offering the benefit in the future. “I expect to see this trend increase in the years ahead,” Lu says, “as employees come to expect repayment assistance as part of a standard benefits package.”
Student loan repayment benefits are an evolution of tuition reimbursement benefits, which many companies have already offered for years. Rather than helping you when you’re completing your degree, they are now helping you pay off your degree.
Repayment assistance can come in several forms. “For example, it can be done as a stipend,” says Lu, “in which a company pays up to a certain amount of money per year or month. Or as a reimbursement: a company pays a lump sum to employees once they’ve worked there for a certain number of years.” Other companies provide student loan repayment money as a signing or performance bonus.
It’s important to dig in and understand the details as though your life depended on it — because it just might.
SHOULD YOU CHOOSE AN EMPLOYER WHO OFFERS REPAYMENT BENEFITS?
Student loan repayment benefits are just one part of compensation package, so make sure you look at and compare full benefit packages if you have multiple job offers. Some companies that offer student loan benefits do it by cutting back on other types of benefits (for instance, you may pay more for your health plan).
Still, many millennial employees prefer getting money to help them repay student loans over extra money toward something like their retirement. In a recent survey, about half of millennial employees said they would rather have repayment assistance instead of a 401(k) match. “which makes sense,” says Lu, “when you consider that student loans feel like a much more urgent problem than retirement contributions.”
THE IMPACT OF REPAYMENT BENEFITS
Studies have found that many millennials are putting off important life milestones like buying a home, getting married and having children in order to repay student loans. Companies that provide student loan repayment benefits have the potential to change the course of millennials’ lives.
“Financial stress is really significant for many millennials, especially those with student loans,” says Lu. “Having employer support for repayment eases this burden and can help employees feel better about their overall compensation.”