Younger workers are challenging employers’ status quo and I like it! In today’s challenging labor market, employers are finding they need to “reinvent” themselves more than ever and it is quite a healthy exercise for our future workforce.
This is leading all types of business entities to re-evaluate what they are doing to effectively hire and retain talented individuals. Benefit programs are evolving into much more than the historical norm of health, dental, vision and possibly life and disability plans. Employees want more and often they want their employer to simply care about them and their personal needs through innovative ideas and funding opportunities outside of the traditional paycheck.
You might be able to relate to this idea, because you at one point in your life may have been burdened with a big nugget of debt to pay off before even looking to finance a home, car, wedding ring, etc. This nugget is the dreaded student loan that follows that hard earned degree you pursued to help you find that great career opportunity. Wouldn’t it have been nice 10, 20, 30 years ago as you entered your young career to be offered student debt relief by an employer who said we’ll help get rid of it while you are employed with us?! You would have been able to advance your standard of living much quicker.
We’re experiencing an evolving culture of employment and this article simply identifies one simple idea. I’m not sharing any breaking news, but instead I’m shedding light on what a few employers are already doing and what we expect to see grow in overwhelming popularity in the very near future. Employers are creating various programs to help alleviate student debt to their incoming class of employees.
According to a 2018 Forbes article, there are currently about 44 million borrowers of student loans with an average estimate of $37,000 owed individually and rising. Student loans are outpacing income levels and inflation.
There are various compensation programs available for an employer to help reduce an employee’s loan balance. These programs are not tied to ERISA and if desired can be written solely by the employer as long as they follow the administrator’s guidelines. Many insurance carriers as well as third party administrators are offering programs that employers may enlist in for minimal monthly fees. The employer contribution is a taxable benefit and often the employee’s portion is post tax. You might see an insurance carrier build the cost into these programs as a part of paying a premium for their insurance lines of coverage. The standard third party administrator whom you might use for FSAs, HSAs, HRAs, and Cobra Administration are building these types of programs into their menu of services as well.
Think of what an employer contributing $100 or more per month could to do to help alleviate the stress of your employee facing these payments for years. Or in a different fashion, you could provide a program to help employees refinance debt instead of providing them the monthly payments to reduce their debt as mentioned above. Compliance is top of mind these days so you will want to do your homework when looking for the right fit. Lean on your trusted business consultants to help you navigate the various plans available out there.
The bottom line is that you, the employer, are continually tasked with being the conduit of information to what’s out there to help your employees in their daily lives. Offering to help reduce student debt is in rising demand and accompanies other growing programs such as legal assistance, identity protection, employee assistance programs, wellness incentives, pet insurance , support for behavioral and mental health concerns, and employers even contributing to 529 college savings plans.
Providing your employees with these tools provides them with a purpose that will in turn provide you with a commitment from them to stay and succeed.