Student Loan Assistance Programs: The Latest Golden Handcuffs?
For most young Americans, undergraduate and graduate-level education opportunities have never been more expensive to undertake OR more important to obtain. As the pressures of globalization continue to raise the standards for American workers, students are forced to reach new educational heights in order to increase their chances of landing a top job after graduation. This trend has pushed the price of higher education to an all-time high, resulting in mountains of student loan debt for most graduates. In fact, most studies show an average of more than $37,000 in debt per graduate. It can be a crippling weight for job candidates, but it is also creating a unique opportunity for employers to attract and retain the most talented individuals in the market.
As the talent gap increases and companies are forced to do more recruiting than simply hiring, it has never been more important for employers to design competitive benefit and “perk” packages for their employees. Those strategies must develop around emerging needs for young professionals, and student loan debt assistance is quickly becoming one of the most effective recruiting and employee retention tools for employers.
Recent studies have shown that as many as 80% of student loan debt holders would be more likely to work for companies that offer a debt payment benefit. With that number in mind, employers across the country are developing programs to do just that. PriceWaterhouseCoopers is one of the most notable organizations to do so, offering up to $1,200 per year per employee. Fidelity is pursuing similar programs along with several other leading organizations. Such programs, which enable employees to pay off their debt more quickly and potentially save thousands of dollars in interest payments, are beginning to give employers who utilize them a competitive advantage when it comes to recruiting the most talented job candidates. And, there is an opportunity for those employers to maintain that advantage. In return for affording an employee the benefits of an employer-supported debt repayment plan, the employer can require employee repayment in whole or in part should the employee leave the company prior to a certain number of years of employment.
No matter how you slice it, this new trend offers significant benefits to both employers and employees who are equally willing to partake. The jury is still out on how widespread this trend may be, however. That’s due largely to the fact that money paid to employees for student loan debt is counted as taxable income. Because both the employee and the employer must pay taxes on the benefit, some organizations still question whether this new recruiting tool is worth the expense. While there are some Congressional efforts to exempt such payments from income taxes, employers must decide for now if their recruiting and retention strategies are enough to succeed in such a competitive, talent-starved economy, or if adding this powerful tool is necessary. Here at Schaffer Associates, we’re eager to help your company make that decision and recruit the most talented individuals available. Call us today.
Schaffer Associates is an executive search firm specializing in talent acquisition for the hardware, home improvement, building materials, and consumer products industries. As premier executive recruiters with expert focus on your industry, we help you HIRE SMART.