Student Loan Debt Remains a ‘Pain Point’ for Employees

Some employers offer support through paydown benefits

Kathy Gurchiek By Kathy Gurchiek July 21, 2023

​A recalculation of student loan payments, announced July 14 by the U.S. Department of Education, will erase the balance for certain loans such as the Federal Family Education Loans program. More than 800,000 loan holders will be covered.

The announcement comes after the Supreme Court in June struck down the Biden administration's student loan forgiveness plan.

Not all employees with school debt will qualify for the federal forgiveness plan. Depending on where they work, though, they may find relief through employers that offer paydown benefits for eligible workers.

Employers have been helping in two ways, according to Fidelity Investments:

  1. Making payments directly toward eligible employees' student loans.

  2. Under the SECURE Act 2.0 of 2022, offering a match into a retirement plan when the employee makes a student loan debt payment. Sixty-six percent of student debt in the U.S. is held by women, and Black American graduates hold almost two times as much debt as white American graduates, according to Fidelity Investments.

"Faced with such a heavy burden, borrowers are often unable to save for emergencies and retirement, and delay big life events," Fidelity noted on its website.

PwC has offered its Student Loan Paydown benefit since 2016. It provides an annual $1,200 stipend in monthly $100 installments for up to six years or until the employee is promoted to manager—whichever comes first. The benefit applies to eligible employees only; employees whose children have student loan debt are not eligible.

The maximum payout is $7,200. The benefit can shorten loan payoff by up to three years, reducing participants' loan principal and interest obligations by as much as $10,000, said Rod Adams, PwC's talent acquisition and onboarding leader.

"That, we felt, was a meaningful impact on our people," he said, adding that as of March 2023, the benefit has helped pay off more than $59 million of debt for nearly 24,000 PwC employees.

Other employers, such as streaming service Hulu, cosmetics chain Estee Lauder, and apparel and footwear company Adidas offer similar benefits to eligible employees, according to CNET.

CVS-owned health care company Aetna matches student loan payments for its full- and part-time employees up to $2,000 annually; the lifetime maximum is $10,000, CNET reported. Fidelity Investments has a cap of $15,000 on its student loan initiative for employees working at least 30 hours per week; a similar benefit for eligible part-time employees is capped at $7,500 with a maximum of seven years’ worth of monthly payments.

Only about 8 percent of U.S. employers, though, provide student loan repayments to eligible employees—a percentage almost unchanged over five years, according to SHRM's 2023 Employee Benefits Survey.

While the appeal for job candidates is obvious, such a benefit can be used by employers as a recruitment, engagement and retention tool. Fidelity Investments found that attrition rates among employees participating in its program are 78 percent lower than for its employee population at large. Among new hires, half said the student loan repayment benefit was a major factor in their decision to join the company.

A large percentage of the approximately 5,000 new entry-level employees PwC hires every year are new college graduates, according to Adams.

"We were hearing from them directly about the challenges they were having with student loans," he told SHRM Online. "It was a distraction, a pain point," and an issue that frequently came up in mentoring and coaching sessions.

One-third of PwC's eligible employees use the benefit, according to Adams. There is no repayment stipulation or tenure requirement. 

A Fidelity spokesperson noted that while the employers it works with do not tend to attempt recovery of these benefits through tenure requirements, some may choose a waiting period before eligible employees can enroll; others may distribute the total benefit over a set time period to encourage retention.

While Adams said recruitment wasn't the benefit's aim for PwC, the organization gets a lot of questions during recruitment about the program.

"Interestingly enough, the fact we offer it is attractive to those who don't need it" but have friends with student loans, Adams said. "The fact we're offering it is a plus when we think about our culture."

A student loan stipend can also be a retention tool for employers.

A survey for investment company Voya Financial found that those who have a student loan were more likely to say they would stay with their employer than those who did not have a student loan (63 percent versus 48 percent). The survey was conducted in June 2023 with 1,004 adults ages 18 and older. Among all respondents, 483 worked full time or part time.

Not everyone is on board with employers offering student loan repayment benefits. Some say it can create resentment and appear unfair among other segments of employees, such as those burdened by medical bills and other types of debt.

"Our Student Loan Paydown benefit is one aspect of our larger approach to provide our people with personalized and customized benefits and rewards," Adams said. "We are continually keeping a pulse on the changing landscape and listening to our peoples' needs to provide innovative benefits and a people strategy that is fit for the future."

For employers considering offering a student loan benefit, though, Adams recommends keeping it as simple as possible, such as setting up direct payments to the loan provider. Under PwC's benefit, related taxes are deducted from the employee's net pay, and the benefit is limited to U.S. associates (an entry-level role) or senior associates (a pre-managerial role).

"Every company," Adams said, "has to think about the impact they're trying to have" when considering such a benefit and what constitutes a meaningful dollar figure. 

Other SHRM Resources:
Student Loan Assistance Policy, SHRM member-only resource
Financial Strain Impacts Workers' Mental Health, SHRM Online, July 7, 2023


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