Stand Out & Support Employees with Student Loan Repayment Benefits
In today’s competitive job market, offering unique employee benefits can make a significant difference in attracting and retaining top talent. One such benefit that’s gaining traction is student loan repayment assistance. While traditional offerings like health insurance and retirement plans remain essential, including student loan repayment benefits in a company’s package can set an organization apart, demonstrating a commitment to its employees' financial well-being.
Why is Student Loan Repayment Assistance Gaining Popularity?
Student loan repayment benefits are relatively new compared to more established offerings like tuition reimbursement, retirement plans, and health insurance. Yet, they are becoming increasingly popular, and for good reason. As of 2024, over 44 million Americans are burdened with student loan debt, collectively owing more than $1.7 trillion. This debt weighs heavily on employees, influencing their financial decisions, work performance, and overall well-being.
Employers offering student loan repayment assistance can alleviate some of this burden, positioning themselves as forward-thinking and employee-centric. By integrating this benefit, companies can attract recent graduates eager to manage their debt and experienced professionals who may still be grappling with student loans years after completing their education.
Employer Benefits of Offering Student Loan Repayment Assistance
Providing student loan repayment assistance offers several advantages to employers beyond just standing out in the job market:
Attracting Top Talent: As the workforce evolves, potential employees look beyond salary when considering job offers. Unique employee benefits like student loan repayment assistance can be the deciding factor for candidates choosing between multiple offers.
Boosting Retention Rates: Employees are more likely to stay with a company that supports their financial goals. Offering student loan repayment benefits can increase loyalty, reduce turnover, and save the company money on recruiting and training new staff.
Enhancing Workplace Culture: Employees who feel valued are more engaged and productive. Companies that invest in their employees' financial futures foster a positive workplace culture, leading to higher morale and better overall performance.
Enjoying Financial & Tax Incentives: While the primary focus should be employee benefits, small businesses can also gain financially. In some cases, contributions toward student loan repayment employee benefits can be tax-deductible, offering a financial incentive to employers.
Five Steps to Implement Student Loan Repayment Benefits
Starting a student loan repayment assistance program doesn't have to be complicated. Here’s our high-level recommendation of how to begin:
1. ASSESS EMPLOYEE NEEDS
Conduct a survey to understand how many employees would benefit from student loan assistance. This will help tailor the program to your workforce's specific needs.
2. DETERMINE BUDGET & STRUCTURE
Decide how much your company can contribute. This could be a monthly payment directly toward the employee's student loan or a yearly lump sum. Determine eligibility criteria, such as years of service or employment status. It’s essential to understand the legal and tax considerations of supporting employees with student loan repayment benefits.
3. PARTNER WITH A 3RD PARTY PROVIDER
Consider working with human resource professionals (like us at JLS Accounting!) who specialize in managing student loan repayment benefits and payroll processing. We can handle the logistics, making the process smoother for both the employer and employees.
4. COMMUNICATE THE BENEFIT
Clearly communicate the details of the student loan benefits to your employees. Transparency about how the program works, who is eligible, and how they can enroll is crucial for participation.
5. MONITOR AND ADJUST
As with any benefit, regularly review the program’s effectiveness and make adjustments as needed based on employee feedback and company goals.
Incorporating Student Loan Repayment into Educational Assistance Programs
Employers have long recognized the value of educational assistance programs, typically in the form of tuition reimbursement. However, these programs can also be adapted to help employees with existing student loans. According to the IRS, employers can contribute up to $5,250 annually toward an employee's student loans without the payments being considered taxable income to the employer or employee. This provision was extended through 2025 and offers a significant financial incentive for companies to support their employees' education-related financial burdens. (Of note is that the $5,250 figure is a combined limit that also includes employer-provided tuition assistance.)
By incorporating student loan repayment into existing educational assistance programs, employers can provide a comprehensive solution supporting employees at various stages of their careers. This approach not only helps attract and retain talent but also enhances the overall value of the company's benefits package.
Case Studies: The Impact of Student Loan Repayment Assistance
Research and case studies have shown that implementing student loan repayment benefits can profoundly impact both employees and the organization. For example, a survey by Ascendium Education Solutions highlighted that employees who receive student loan repayment assistance are more likely to stay with their employer longer, experience lower levels of financial stress, and show higher productivity at work. Additionally, studies have shown that 86% of employees said they would commit to a company for five years if it helped pay off their student loans.
These findings underscore the long-term value of offering student loan benefits, not just as a recruitment tool but as a strategic investment in employee satisfaction and company culture.
The Future of Student Loan Repayment Benefits
As the workforce evolves and student loan debt remains a significant burden, student loan repayment benefits will likely become a standard offering. Businesses that adopt this benefit early can position themselves as leaders in employee financial wellness, attracting top talent and fostering a loyal, engaged workforce.
While the Secure 2.0 Act has introduced some changes related to retirement plans and student loans, the primary focus should be on the positive impact of offering student loan repayment assistance as part of a comprehensive employee benefits package. Your organization can stand out by taking this proactive step, ultimately contributing to the success and well-being of your workforce.
The Take-Away
Providing student loan repayment benefits is not just a trend; it’s a strategic move that can set your company apart in a crowded job market, help attract and retain top talent, and support your employees’ financial well-being. As more businesses recognize the importance of supporting their employees’ financial futures, student loan repayment assistance will likely become a standard benefit. By taking action now, you’ll provide unique employee benefits that attract top talent, boost retention, and foster a positive workplace culture.
Need more information about offering student loan repayment assistance, or are you ready to get started? Book an introductory call with JLS Accounting today!