Move Over 401k – Make Room for the Hottest Employee Benefit Today
Employers competing for talent in a hot job market have a new tool in their arsenal: student loan repayment support.
To the delight of many job hunters, a growing number of companies now offer some form of assistance with student loan debt alongside more traditional HR benefits like 401(k) plans and health insurance. And it makes sense – with the average debt for recent undergrads and graduates estimated at about $35,000 and $58,000, respectively, who has money left over to fund a 401(k)?
But what started as a way for cutting edge tech companies and big professional services firms to attract new, often young talent out of grad school has morphed into something with much broader appeal. At SoFi, we’ve seen a 300% increase over the past two years in employer adoption of student loan assistance benefits. Our 650+ partnerships include not only Fortune 500 companies and top 100 law and consulting firms, but also increasingly a number of smaller startups and more traditional companies.
So what’s driving this broad adoption of student loan employee benefits?
For one thing, competition for talent is high across multiple industries at many levels, and companies looking to attract individuals with specific degrees or experience are looking to gain the upper hand. This means acknowledging that student loans aren’t just a “millennial problem” – particularly when you consider that 25% of all grad degree earners borrow more than $100,000 (that can take a while to pay off), and a growing number of parents are dipping into debt to help pay for their kids’ education.
But it’s not just about talent acquisition. Many companies are realizing that student loan assistance can have a number of retention advantages, such as reducing turnover and increasing employee satisfaction and loyalty.
“We pride ourselves on offering the most competitive traditional insured benefits to our colleagues,” said Marvin Adler, Director of Global Benefits at Duff & Phelps, a financial services firm with more than 2,000 employees. According to Adler, a key differentiator in making the firm an employer of choice is a full suite of voluntary benefits, including a legal plan, child care and student loan refinancing, among others. “With these plans, especially student loan refinancing, our employees can save thousands of dollars – giving them the opportunity to fund their retirement account and take advantage of the other company-sponsored benefits,” he said.
Also, an increasing number of companies are learning they can offer a student loan benefit for free. Employers with more resources can choose to help contribute to student loan payments, but those that can’t offer contributions can simply partner with a student loan refinancing company to offer refinancing as a voluntary benefit (typically with an additional interest rate discount). Employees that qualify to refinance enjoy benefits like lower monthly payments or shorter loan terms, and can save a significant amount on interest – all at no cost to the employer.
Our prediction is that more job hunters and employees can expect to see some kind of student loan benefit from employers over the next few years. We also see the trend expanding to encompass other forms of financial assistance – for example, mortgage loan and personal loan interest rate discounts. In the relatively short time we’ve offered both of these programs, we’ve already seen tremendous adoption from a wide range of companies.
Which is all great news for employers and employees alike – with programs like these, everybody wins.
SoFi has already partnered with over 650 top companies to rethink employee benefits. Check with your employer to see if SoFi is a partner to take advantage of even greater savings.
Employers: visit SoFi.com/sofi-at-work/ to learn more about SoFi’s student loan assistance benefits.