- Americans hold an estimated $1.4 trillion in student debt, and employers are responding to demand for relief on the part of workers, according to B2B research and ratings firm Clutch. In a survey of 507 full-time employees who started a new job in the past 6 months, Clutch found 31% of candidates had encountered companies that offered some level of student-loan repayment benefits during their job search.
- Only 4% to 5% of U.S. companies currently offer student-loan repayment assistance, Clutch said, but the benefit may become a differentiator in recruiting. Research cited by the company suggests women, minorities and other underrepresented groups are impacted by student-loan debt disproportionately.
- Due to the disproportionate impact of student-loan debt, companies looking to improve their diversity and inclusion efforts could utilize repayment benefits to attract a wider talent pool, Clutch said. And because debt repayment can take years to fulfill, it said, businesses could also see higher retention.
As businesses struggle to attract candidates in today's tight applicant market, the student-loan debt crisis could be an opportunity for those with the means to attack the problem. It's not as if the demand isn't there from candidates: over 70% of workers in survey by financial technology firm CommonBond said they want their employer to provide help in relieving student-debt burdens. HR executives in the survey, however, listed student-loan repayment as No. 3 on their list of benefits priorities.
Even so, research suggests employers are gradually becoming open to the trend. Sotheby's, an international auction house, announced it would introduce a benefit allowing staff members to pay up to $1,800 per year toward the principal on their student loans.
Employers looking to introduce the benefit also may have received a boost from the federal government to do so. The Internal Revenue Service, in an August private letter ruling, permitted an employer to amend its 401(k) plan to contribute to the retirement accounts of employees making payments on their student loans tax-free, provided that the employee(s) make student loan payments of at least 2% of their salary.