The Class of 2015 has been on the job hunt for almost a year now, and they’ve been carrying quite a heavy backpack. According to the Wall Street Journal, the recent grads are the most indebted class ever – at least until caps are thrown in the air, yet again, come May 2016.
On average, 2015 graduates have racked up more than $35,000 in student loan debt, a lump sum that has more than doubled since “I Will Always Love You” topped the charts over twenty years ago. As the debt totals rise, so do the number of students taking out loans to cover the cost of higher education. In 2015, 71% of students graduated from a 4-year institution with a student loan, rising 7% from 2005.
To combat the extra financial baggage, companies on the prowl for recent graduates are utilizing creative solutions to attract new hires. While benefits like healthcare packages, gym memberships and overflowing community pantries used to lure millennials, companies such as Fidelity are offering student loan repayment as the latest perk. The LA Times says that full-time employees at the manager level or lower can receive up to $2,000 per year paid toward their student loan, capped at a total of $10,000. Employees continue to make their individual loan payments, while Fidelity utilizes a third-party vendor to apply its contributions to the principal, reducing the loan overall.
This shift in employee perks is a response to the heavy financial burden many millenials face today. “[W]hen considering a job and its offered salary, the ability to pay my loans on that salary is one of the top considerations”, says Meredith Titterington, a 29 year-old Practice Support Specialist from Ithaca, NY who has acquired $110,000 in student loan debt. Titterington agrees that loan repayments benefits could be a unique and exciting move for employers. “In fact, I would take a lower salary if most or part of my loan payments were taken care of”.
According to the Boston Globe, millennials are the largest slice of the labor force pie, and employers may be utilizing loan repayment assistance as a distinguishing factor to compete and retain recent graduates on the job hunt. In addition to Fidelity, companies such as Natixis Globas Asset Management, PricewaterhouseCoopers, Chegg, and LendEDU are also offering the perk and it doesn’t seem to be stopping there. Tuition.io, the third-party vendor used by Fidelity, claims to be in talks with some of the largest organizations in the United States, including 19 Fortune 500 companies.
It is safe to say that the landscape for employee benefits is changing, and student loan repayment perks are at the forefront. However, as a millennial myself, I’m left wondering how soon will other employers adopt this practice, and how much will it actually help? This process is in the early adapter stage and will take time to disseminate nationally. Once it does, how much of an impact will it really make? A $10,000 contribution over 5 years is amazing – but in Meredith’s case, what about the other $100,000? She may want to consider federal loan repayment plans that forgive the remaining balance after 20-25 years, or even a career change to the nonprofit sector to take advantage of Public Service Loan Forgiveness. The point is, even as this HR trend takes hold, it’s important to have a firm grasp on the available options for your federal and private student loans. Until student loan repayment benefits come knocking on your office door with a much larger money bag, visit www.mycreditcounselor.net for resources on how to manage your federal loans, and even learn how to settle your private student loans for less.