The Latest Job Benefit Helps Employees Pay Off Student Debt
What perk would most entice you to accept one job offer over
another?
A company car? (How Boomer-like of you.)
A 401(k) plan?
(Pretty common these days.)
With Millennials now comprising the largest share of the
workforce, a growing number of companies are betting that offering to help pay
off student debt is the next game-changer when it comes to attracting and
retaining the best and brightest.
It's not a bad wager. Total education debt stood at a
staggering $1.52 trillion at the end of March. And while the perk is by no
means reserved only for Millennials - hey, even 4 percent of those 45 and older
are still in the hole, according to the Pew Research Center - it's not lost on
anyone that the average student loan borrower will have graduated this year
saddled with more than $37,000 in debt.
It stood at about $600 billion 10 years ago, MarketWatch.com reported.
One of the companies facilitating the new benefit is the
same one - Fidelity Investments - that already handles millions of workers'
401(k) plans. Businesses enrolled in its Student Debt Employer Contribution
program are able to make after-tax contributions on their employees'
outstanding student loans, setting their own parameters as to who and how much
with the help of a modeling tool for estimating their potential recruitment and
retention cost savings.
This is a new and relevant benefit that gives companies a
competitive advantage to hire top talent, said Asha Srikantiah, vice president
of emerging products at Fidelity (fidelity.com), noting that the average
contribution for most companies is about $100 a month, although it can be as
high as $800 monthly in some cases. It also enables employees to pay off their
debt faster, which in turn allows them to focus on other priorities - including
buying a home, raising a family, and saving for retirement.
Among the early adopters Fidelity says it's teaming up with
to offer the benefit: tech giant Hewlett Packard Enterprise; the rail
industry's New York Air Brake; financial firms Millennium Trust and OCC (The
Options Clearing Corporation); and Ariel Corporation, the world's largest
manufacturer of separable reciprocating gas compressors used in the global
natural gas business.
In fact, more than just being a facilitator for others,
Fidelity helped trail blaze this brave new world by having begun offering its
own employees a student debt program back in 2016. To date, more than 8,900 of
its workers have received the benefit, paid directly to their loan service
provider, with some pretty impressive numbers to show for it: a total of $22.5
million in savings on principal and interest, and 34,625 years of loan payments
shaved off.
The company is also taking what it calls a holistic approach
to the student debt issue by offering open access to its website's Pre-CollegePlanning Resources, which can help avoid the pitfalls of incurring too much
debt, and its Student Debt Tool that lets individuals view all their student
loans and repayment options in one place.
A deal recently inked with student debt refinancing
platform Credible.com now also integrates student debt refinancing
into the Student Debt Tool, allowing employees enrolled in the program to
receive actual pre-qualified rates from more than 10 refinancing lenders
without affecting their credit scores.
The idea is to help more Americans take control of their
debt so they can better save and invest for the futures, said Stephen Dash,
Credible's founder and CEO.
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