When you have a growing list of other financial obligations, it can be challenging to balance student loan payments. However, some businesses are going the extra mile to provide assistance.
According to figures from the Federal Reserve, the total amount of student loan debt in the United States has risen to an all-time high of $1.75 trillion. In answer to this, employers are increasingly providing aid as American workers find it harder and harder to make their student loan payments.
What Has Changed in the Field of Student Loan Benefits
A recent poll found that only a small percentage of businesses were giving help with repaying private student loans as a bonus. However, recent changes have brought to light just how much student debt affects regular Americans. A provision to halt payments, interest charges, and collections on federal student loans held by the Department of Education was part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act when it was passed in March 2020.
The CARES Act also allowed companies to exempt up to $5,250 in annual student loan payment help from their employees’ income and offer it to their workers. The Consolidated Appropriations Act put an extension on that clause’s deadline from the end of 2020 to 2025.
In response, a recent study found that the proportion of employers providing student debt repayment aid as a benefit has more than doubled. Furthermore, there are more companies planning to do so.
Here are some innovative strategies employers use to show you how businesses are assisting their workers.
1. Allowing staff to exchange unused vacation time for payments on student loans.
Staff members carry over unused paid time off (PTO) each year. Under this program, employees are able to convert a certain number of hours of carryover PTO into a student loan payment. Some employees pay off as much as $1000 or $2000 a year on such a program.
2. Offering a signing bonus that can be used to pay off student loan debt.
In addition to this signing bonus, some companies offer a second incentive for the same purpose once employees have worked for the company for five years.
3. Linking 401(k) contributions to student loan payments
Paying off student loans has greatly hampered the ability of recent college graduates to save for retirement. A recent study found that 73% of student loan borrowers aren’t making the most of their retirement resources. Some companies are providing a solution to this problem
More specifically, companies provide a 5% contribution to each employee’s retirement plan, provided that the employee makes student loan payments equivalent to or greater than 2% of their qualified earnings.
Furthermore, employees are not required to make retirement plan contributions in order to receive the matching contribution. Even the IRS grants special authorization to provide the benefit.
4. Providing student loan payments.
There are private banks and asset management companies introducing their initiatives to help with student loan repayment. These organizations provide monthly payment perks like other private employers do, however, they are not limited to recent college graduates. These banks also provide aid to parents who got student loans to pay for their children’s education.
These employees receive a monthly amount to put toward their school loans during their first year of employment, whether they are a parent, graduate, or undergraduate. This amount increases each year until the loan is repaid.
5. Exchanging student loan payments for company stock.
Employees with a certain number of years of employment could be made eligible for company stock awards each year, which they could sell to pay off student loans.
Conclusions
These and other programs are part of a growing trend of businesses helping employees pay off student debt. As these businesses become more creative and innovative, it’s likely that in the future, job-seekers may see this as one of the most important benefits to look for in a company.