The Importance of Offering 529 Plan Contributions in an Employee Benefits Package
Strong employees are the backbone of any successful business. And, when it comes to attracting and holding on to the best talent, it’s no secret that offering competitive and valuable employee benefits is one of the most effective ways to demonstrate a longstanding commitment to your team.
Some employers are starting to venture beyond standard offerings and extending into things like profit-sharing and bonuses, transportation and tuition reimbursement, and perks like free meals, discounted fitness programs, childcare, and other services to their employees. And, in many cases, these enhanced offerings are helping to set these companies apart from the rest.
In a landscape where so many companies offer comparable benefits, many strategic employers are finding new, innovative ways to anticipate and accommodate the needs of their employees.
When it comes to demonstrating a commitment to your team, it may be worthwhile to start looking beyond traditional benefits and anticipate other offerings your employees may be looking for, such as financial wellness benefits.
It’s no secret that education-related debt is negatively impacting the lives of many American workers. In July 2019, the average student loan balance among individuals between the ages of 23 and 38 was $34,504 .
As a large portion of today’s workforce struggles to save for education—whether for themselves or their children—and pay off existing student loan debt, it’s becoming increasingly relevant for employers to consider how they can help their employees reach these important goals.
Non-traditional employee benefits, such as 529 college savings plans and student loan repayment programs, have been shown to positively affect employee engagement while also helping employers attract top talent in an increasingly competitive job market.
Here, we take a look at some of the advantages of offering 529 college savings plans as part of an employee benefits package and explore why it may be something that forward-thinking employers should consider offering their teams.
Happy People Make Better Employees
According to PricewaterhouseCoopers’s most recent Employee Financial Wellness Survey , financial insecurity is the leading cause of stress among employees in the United States. PwC found that as many as 59% of respondents said they currently were facing a financial challenge or had financial concerns. For context, this number is steadily increasing and increased 19% since last year.
When asked what causes them the most stress, more employees cited financial matters than any other life stressor combined. While employees’ financial stressors may not seem directly tied to the success of a business, there is, in fact, a direct link between how much they are worrying about money and whether or not they are able to show up fully at work.
According to The Society for Human Resource Management , employees’ financial stresses have resulted in a 34% increase in absenteeism and tardiness. What’s more, a study out of Boston College found that financially stressed individuals miss almost twice as many days of work every year when compared to their less stressed colleagues.
Offering employee benefits that help workers to more effectively tackle the financial stressors in their lives has the potential to directly impact their sense of wellbeing, both at work and outside of it.
By supporting employees in their professional and educational endeavors, through 529 plans or other financial wellness benefits, employers may also positively affect overall engagement and productivity among their staff.
Paying Attention To Popular Demand
Workers are increasingly prioritizing meaningful benefits over frivolous perks. In a time of soaring debt and costs of living, financial wellness has found its way to the forefront of many employees’ minds—and it’s time for employers to catch up.
Since 1990, student loan debt and tuition costs have risen by risen by almost 400% , and that number only stands to grow. Today, this country collectively owes around $1.5 trillion in student debt . In the face of such formidable education costs, it may be time for employers to take action.
According to the 2019 Guardian College Debt in America study , a full 49% of people surveyed said they are interested in contributing to a 529 plan at work. There’s no mistaking this figure—there is a growing demand among American workers for more financial support and constructive benefits from employers.
Given that just 10% of employers were providing their employees with 529 college savings plans as of June 2019, the growing demand for financial wellness benefits may also offer a unique opportunity for strategic employers to establish themselves as leaders who are paying close attention to what workers want.
Saving Money By Decreasing Turnover
Employee turnover is presenting problems for companies all across the U.S. In 2018 alone, one report using data from 250,000 employees found that employers lost a whopping $617 billion from employee turnover , with the report’s authors suggesting that at least $469 billion of this figure was controllable. In other words, companies are losing valuable employees when they don’t have to be.
As mentioned earlier, decreasing employees’ financial stressors can have positive impacts on productivity and employee engagement. But pacifying employees’ financial anxieties may also play a role in reducing turnover and strengthening retention.
Adding financial wellness benefits like 529 plans could be a way for employers to help prevent top talent from leaving the company. According to the 2019 Work Institute Retention Report , 41.4 million U.S. workers left their jobs in 2018, with voluntary turnover exceeding 27% nationally.
Of the employees that jumped ship, the report found that more than three out of four of them could have been retained by their employer, had they intervened or offered better benefits that demonstrated a commitment to their future. The report also found that doing so could have potentially saved companies an estimated $15,000 per each worker lost.
Improving employee satisfaction and decreasing turnover can be a complex issue, but there are many ways to begin laying the groundwork for a better workplace. Offering more valuable benefits, such as 529 plans, may be a retention strategy that works.
Offering The Benefits Your Employees Want And Need
Today’s job market is getting stronger and more competitive. When this is the case, workers have the upper hand when it comes to bargaining power, and it’s time for employers to develop better strategies to find and retain great talent.
In the face of widespread debt and an increasing prioritization of financial wellness, offering benefits like 529 College Savings Plans and Student Loan Repayment Plans may help to give forward-thinking employers a competitive edge.
In many cases, offering benefits that support employees’ financial lives may be the reason why a competitive applicant chooses to join—and stay with—a company. This is why successful employers are increasingly realizing that it’s time to get creative and strategic about the employee benefits they offer in order to stand out among other companies.
By incorporating benefits programs like 529 College Savings Plans and Student Loan Repayment Plans into their company work culture, employers can demonstrate that they are invested in helping their employees conveniently save for their children’s education.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC .
SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.