Memphis is first U.S. city to offer college debt reduction plan to workers
- Memphis will be the first U.S. city to run a student-debt reduction program for municipal workers, according to an email statement from city officials. The new benefit, called the Student Loan Reduction Program, will help city workers saddled with student loans lower their debt.
- City workers will begin receiving monthly contributions of $50 as of July 1. The funds will count towards principal repayment, according to the statement. Tuition.io, a private firm offering a platform for employee student loan contributions, will administer the program.
- To be eligible for the program, employees must be active, full-time workers wth at least one year b staff of service. City officials say the program is a sign that Memphis is "dedicated to building and retaining an engaged workforce."
Businesses need no introduction to college loan debt; it's a near-universal burden on entry-level workers. In fact, one university research study found that individuals with substantial student debt repayments find those debts negatively affect both their net worth and the value of their financial assets.
Little wonder, then, why businesses also have begun adding student-debt reduction plans to their benefits offerings, hoping to attract young talent by helping to stabilize younger workers' financial situation. The reality of the issue, though, is that it's not "just a millennial problem." Parents and graduate students face their own troubles with debt when trying to finance either their own education or that of their loved ones.
Even government officials are catching onto the idea: In April, a bipartisan Senate bill that would allow employers to provide a tax-free employer contribution of over $5,000 towards their employees' student loan debts. Many observers suggest the bill has a higher chance of clearing the legislative process due to bipartisan concerns about the rising cost of college.
Tuition.io's CEO Scott Thompson said in the statement that Memphis's program should be a clarion call for other municipalities. It may very well be. Private sector employers aren't directly affected, but the rising popularity of student-debt reduction plans deserves their attention.
- HR Dive College loan repayment benefit growth is on the rise
- HR Dive UPDATE: Senate introduces new version of college loan repayment bill
- OUPBlog (Oxford University Press) Student debt: not just a millennial problem