We asked experts all over the country what the top reason for offering student loan benefits is. We were totally blown away by the number and variety of responses.
Here are the 6 most common responses we got about why employers should offer Student Loan Benefits:
- Improves Focus
- Makes for Life-long Employees
- It’s a Tax-Friendly Benefit
- Improves Mental Health
- Attracts & Retains Talent
- Makes Your Company More Competitive
Helping the employees with their student loans eliminates one more thing they have to worry about. This frees up their minds from stress and helps them focus at work. Stressed employees may even consider second jobs that can drain their energy at work.
A lucrative student loan repayment package will be a great incentive for employees to stick with the firm instead of constantly looking for new jobs. This improves their focus and increases overall productivity. Therefore, it is a good idea to offer student loan benefits to make the best out of your employees.
Antreas Koutis, Financer
Makes for Life-long Employees
Companies should offer their employees student-loan assistance because it drastically increases the likelihood of retaining those employees in the long-term. Student loan assistance is a rare benefit for professionals today in a labor market mired in student debt. Staff are much less likely to be inclined to quit a job that helps them pay off debts they may otherwise have been paying until their retirement.
When considering this strategy for law firms or private healthcare practices, the incentive to retain employees by helping sponsor their schooling is twice as strong given the potential amount of debt. The student debt epidemic has defined a generation. Turn that circumstance into a business opportunity by helping your employees rid themselves of debt in exchange for loyalty.
Kevin Miller, kevinmiller.com
It’s a Tax-Friendly Benefit
Benefits from student loans are pre-tax. Employers can now make tax-free payments of up to $5,250 annually. Regardless of whether the loan is federal, private, or refinanced, this benefit enables employers and employees to avoid paying national income and payroll taxes on student loan contributions.
Here is how it operated in the past: According to Poulin, the business would typically pay about $400 in payroll taxes if it contributed $5,250 toward a worker's student loans. If we estimate the employee's federal income tax rate is 22%, the employee would also be liable for an additional $1,155 in federal income taxes. Consequently, only $3,695 of a profit of $5,250 went to the loan. The entire sum is used to pay off the loan, significantly raising its value.
Shashank Kothari, CocoLoan
Improves Mental Health
Student debt remains a consistent challenge facing the younger generation. Eliminating financial stress that comes with loans increases work productivity, but also improves employees’ mental health, reducing turnover. Companies looking to retain top talent such as Gen Z or Millennials need to express that employee well-being is a priority and they offer an effective solution to financial stability. If employers are able to offer a student loan plan, they have more opportunity to recruit strong candidates with a knowledgeable skill set and decrease employee turnover rates.
Natália Sadowski, Nourishing Biologicals
Attracts & Retains Talent
Student loans are long lasting difficulties for working professionals. So much so, that student loan benefits still rank as one of the most popular forms of benefits for Millennial and Gen Z professionals. And it's easy to see why. Student debt can plague working professionals for years, and many of them may find themselves working outside of the field that they went to college for to boot.
For many people, finding the fastest way out from under their student debt is an extremely appealing proposition. Companies that offer relief assistance for student debt on average see more interest and greater employee retention than companies with similar jobs that do not. Debt relief measures for student debt are more than what people want, it's often what they feel they need to get on track. A company that provides this increases its odds of landing quality talent exponentially.
Alex Chavarry, Cool Links
Makes Your Company More Competitive
Employers can offer student loan benefits to make their companies more competitive. In the current job market, employee benefits are more influential than ever in attracting and retaining talented employees. There are almost 43 million Americans carrying student loan debt today. Many companies prioritize candidates with college degrees and, therefore, more than likely some student loan debt.
We haven’t seen many effective solutions to student debt from our government and institutions, making the corporate support for reducing this debt even more valuable. Prioritize top talent by helping them get closer to their goals as they return the favor.
Jason Panzer, Hexclad