Is the student loan repayment benefit worth it?
My jaw almost hit the floor when my employer told me to take past Christmas Eve off, and she would “pay me anyway.” I had never before been offered the kinds of perks that her generation seems to have taken for granted in a job: things like paid leave, incentive bonuses, and a bi-annual “Wellness Benefit.” I’m not a full-time employee, so I don’t have a company healthcare plan, but I was so pleased I had made the decision to work for someone that had been in corporate construction for so long; I felt like I was getting away with it, like she didn’t realize that no one does that anymore.
Of all possible benefits an employee could offer to show that we’re all in this together, it could be student loan repayment. According to Wall Street Journal, only about 3% of companies are currently offering this benefit to employees, and many agree that without a tax benefit, you’re not going to see consistent change any time soon. Still, what is the value, both monetary and beyond, of the famed Student Loan Repayment Benefit?
Because the benefit is retention-based, that is, to benefit employers by reducing turnover and retaining exceptional talent, companies require the commitment of a certain number of years. Natixis, for example, offers $5,000 after five years with the company, and an additional $1,000 a year for five more consecutive years. For those who are serious about cutting down on student loan debt, a ten-year commitment to the company can offer $10,000 directly paid to the student loan provider.
The average repayment benefit allows students to pay off their debt three years faster, saving $4,100 in interest if the principal is around $29,000.
We all know that student loans are a significant financial hindrance for college graduates, particularly those who have graduated into the recession. In fact, people are always talking about how loans are the reason Millennials don’t make significant purchases, such as cars and homes, as frequently as our forebears.
While the impact of the Student Loan Repayment Benefit is certainly dependent upon your total salary and your overall debt, the best thing about it is really a sense of solidarity, a recognition that none of us really knew what we were getting into with the inflation of higher education, and we believe in a future where post-college employment actually helps to pay off loans. There’s evidence of this in surveys that show Millennials would prefer a Student Loan Benefit over health insurance, and even over a 401k, which, while not entirely financially sound, shows the significant stress of student loans, and how companies can help to alleviate this stress for their employees.
But the question remains: how significant does the repayment benefit have to be to make an impact on the life of someone paying back significant loans? And are you willing to stay with a company for this benefit alone?