New Member Promotion >>> Save $15 and get a SHRM tote!
Giving applicants with criminal backgrounds a fair chance at employment can be good for business.
Plus all the HR resources you need to be more efficient and effective this fall!
Apply for the SHRM Certification Exam and begin advancing your career.
Learn how to make the business case for diversity, October 25-27.
Rent subsidies, too, entice—and help—younger workers with debt
With a student loan payment of $351 per month and a 5-year-old son, Elaine Florentino was thrilled to land her first full-time job in 2015 at PwC, an audit, accounting and tax services firm based in Boston. She was also thrilled to learn shortly after she started work that the company would contribute $100 a month toward her student loan debt.
Florentino, who is an assurance associate, decided to add the company contribution to her existing payment for a total monthly loan paydown of $451. That could allow her to reduce the repayment period by about a year. The PwC loan subsidy program, started as a pilot project, goes companywide in July.
Thanks to the benefit, Florentino’s student loan “is not something that keeps me up at night,” she said. She was sold on PwC before she graduated from Bentley University in Waltham, Mass., with a master’s degree in taxation. But had she known about the company’s new perk when she was considering where to work, “I would have been even more sold.” Added Florentino: “Knowing that your employer cares about you is very important.”
Help with student loans and housing costs, and other nontraditional benefits, is being offered by more employers to attract and retain the best and brightest young employees. Particularly in the case of educational loans, the need for assistance is staggering.
Americans are carrying about $1.3 trillion in student loans, according to the Institute for College Access & Success. A 2015 study by PwC and George Washington University found that Millennials in particular are putting off saving for retirement because of their student loan debt. More than 20 percent of Millennials with retirement accounts took loans or hardship withdrawals from those accounts in the year prior to the study. More than half of Millennials surveyed said they worry that they cannot repay their student loans.
Only 3 percent of employers surveyed by the Society for Human Resource Management in 2015 said they offer student loan aid. However, companies that have sprung up to help employers provide such assistance say interest in the benefit is rising rapidly.
‘A Lot of Demand’
“There’s a lot of demand out there,” said Tim DeMello, CEO of Boston-based Gradifi, which manages the student loan benefit for PwC and other organizations. “Hundreds of companies” have expressed interest in using his platform since PwC launched its pilot program. “This is a societal problem,” DeMello said. “I got into this because of the societal need.”
He and other proponents of employer-offered student loan assistance say the cost to employers has not been a major stumbling block to date. However, the fact that the benefit is taxable for employees can be a sticking point. Some employers are “grossing up” their subsidies, such as from $100 to $120 a month, to cover much of the worker’s additional tax burden. Most companies are not doing so, instead explaining the tax aspect to participating employees, DeMello said.
There are at least four bills pending in Congress that would make the benefit tax-free, though proponents see little chance of such legislation passing before the 2016 elections. Another drawback is that after a set number of years, or once the student loan is paid off, the benefit ends.
PwC pays its student loan aid directly to the loan servicer.
Student Loan Genius, an Austin, Texas-based company, offers a twist for its client employers. The employers deduct the amount of the student loan payment from an employee’s paycheck, triggering an employer contribution of the same amount to the employee’s 401(k) account.
Tony Aguilar, CEO of Student Loan Genius, is active in the effort to get Congress to make the benefit tax-free. But even if such legislation is enacted as soon as 2017, he said, “it’s going to take a couple years to set it up.”
Natixis Global Asset Management is among the companies not waiting for legislation to pass. Headquartered in Paris and Boston, the global asset management company rolled out its student loan assistance benefit in December 2015. “We thought it was important that we put our money where our mouth is,” said Tracey Flaherty, senior vice president for retirement strategies and government relations. “We want to make sure that we’re attracting and retaining the best employees.”
American Student Assistance, a Boston-based nonprofit group that offers counseling on financing higher education, has offered a student loan benefit to its employees for more than a decade. “We always mention it in employee interviews,” said Executive Vice President John Zurick. His organization is considering a new line of business helping employers provide the loan benefit. “Our sense is that it’s really catching fire,” he stated.
Help with housing costs is another emerging benefit that can attract young professionals. Addepar, an investment management platform, offers its employees loan and housing assistance—plus free breakfast, lunch and dinner. But the housing benefit has been particularly popular. With worksites in Mountain View, Calif., and New York City, housing is a big deal to prospective and existing employees due to the high cost of real estate. Depending on how close workers live to their office, they can receive $150 or $300 per month in housing assistance. Like student loan help, housing subsidies are taxable to the recipients.
“It’s an attractive perk” to job applicants, said Lissa Minkin, vice president of people for Addepar. “They’re delighted when they hear about it.” Minkin noted that more than 40 percent of the firm’s workers are taking advantage of the benefit.
Facebook and some other tech companies also offer a rent subsidy or housing-related bonus.
For PwC, it was an easy call to make its pilot student loan program permanent. In the short time that it has been offered, “We have seen it drive engagement on campus” among students, said Michael Fenlon, the company’s global talent leader. “It was really a matter of listening to our people,” said Fenlon, who added that his employees are about 80 percent Millennials. “This doesn’t solve everything,” he said, “but it’s a start.”
Steve Bates is a freelance writer in the Washington, D.C., area and a former writer and editor for SHRM.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
CA Resources at Your Fingertips
SHRM’s HR Vendor Directory contains over 3,200 companies