This week we have the pleasure of hearing from Drew Cloud! Drew is a finance master and we are so excited to introduce him to you!
An ever-increasing number of students borrow in order to finance their higher education, and it shows in national statistics. Nearly seven out of ten college students graduate with debt along with their four-year degree, and the number is even higher for graduate and professional students. These graduates are going out to get their first adult jobs already saddled with very adult debt loads.
In fact, a growing number of employers now offer student loan repayment assistance to their employees in amounts typically ranging between $100-250 per month.
How Can Graduates Find Help with Student Loan Repayment?
With student loan debt taking on an increasingly large role for the average employee, it is no wonder that employers are starting to notice that student loan repayment assistance is fast becoming a hot benefit to offer their employees. In fact, a growing number of employers now offer student loan repayment assistance to their employees in amounts typically ranging between $100-250 per month.
For those lucky enough to work for an employer who offers this benefit, the help can be significant. For instance, CommonBond, a well-known online student loan company, offers some of the best assistance in student loan repayment for its employees. Up to $100 a month is offered toward employees’ monthly loan payments, and there’s no cap on how long employees can take advantage of this benefit. That amounts to a whopping $1,200 a year, with no limit on how long an employee can use the benefit.
What Other Companies Offer Student Loan Repayment Assistance?
Other companies are jumping on the bandwagon as it becomes more and more obvious that this is a benefit that employees are looking for. There is a lot of variance when it comes to what’s offered, though. Some companies, such as Connelly Partners, offer loan repayment assistance up to a certain cap, either in total dollars or in years received. Connelly Partners offers employees $100 a month with a 5-year cap of $5,000 and a bonus $1,000 in the employee’s sixth year. Beyond that, however, the benefit vanishes. Price Waterhouse Coopers operates on a similar structure, paying theirs at $100 a month for up to a six-year maximum.
Why Student Loan Repayment Assistance is a Win-Win for Employers and Employees
In addition to the obvious monetary benefit of receiving assistance with monthly loan payments, consider that employers who offer this benefit are communicating something to their employees about the importance of both education and smart debt management. Moreover, these benefits will help employees meet the tough credit requirements for refinancing. For many companies, student loan repayment assistance is an insight into the culture of their company and what they value. By finding additional ways to support their employees’ financial health, many companies are showing that they truly care about and pay attention to what matters to employees.
The Future of Student Loan Repayment Assistance
For graduates just entering the workforce, retirement is a long way off but student loan payments are just a month away.
Student loan repayment assistance might one day become as common as healthcare benefits or retirement accounts. Indeed, some surveys indicate that young professionals in particular are more interested in these repayment programs than in retirement or 401(k) matching accounts. For graduates just entering the workforce, retirement is a long way off but student loan payments are just a month away. Companies increasingly find that student loan repayment assistance gets the attention of younger talent who are fresh out of school and feeling the weight on their shoulders of a hefty student loan balance.
However, there is at least one way that these repayment programs could be improved upon. Under current law, student loan repayment assistance doesn’t enjoy the tax-free aspect that so many other employer-provided benefits do. This means that all repayment benefits are taxable income to the borrower, even though the employer makes payments directly to the student loan servicer. In some instances, the employer takes estimated taxes directly out of the employee’s paycheck to compensate for the tax, and in other cases the employee must reconcile the taxes owed at the end of the year.
An effort was made in 2015 to introduce a bill that was to be called the Student Loan Repayment Assistance Act, with the purpose of making employer contributions such as repayment assistance programs tax-deductible up to $6,000 per year. Although the bill was not passed, it’s possible that another version will come up in subsequent Congressional sessions. Certainly, this benefit is one that categorically fits with other employer-provided benefits, and one that employees are eager to see.
Top 5 Companies Offering Student Loan Repayment Assistance
As mentioned earlier, a number of companies have adopted this unique and enticing benefit – and for good reason. Here are some other companies that offer student loan repayment assistance to their employees:
1) Nvidia – This company, a provider of gaming equipment based out of Santa Clara, California, offers an astounding $6,000 a year towards employees’ student loan debt with a cap of $30,000.
2) Nataxis Global Asset Management – This massive company, mainly based in Paris with locations around the world, including Boston in the U.S., contributes $5,000 towards employees who have been with the company for 5 years as well as an addition $1,000 each year after for the next 5.
3) Fidelity – This massive financial services company offers $2,000 a year towards employees’ student debt with a maximum contribution amount of $10,000.
4) Aetna – Like Fidelity, Aetna contributes up to $2,000 a year towards their employees’ debt with a cap of $10,000.
5) Gradifi – As a company that helps other companies set up student loan repayment assistance, Gradifi naturally offers help to its own employees. Gradifi offers up to $3,000 annually with a cap of $10,000.
Drew Cloud is the creator and primary contributor to The Student Loan Report. He works to provide educational resources and news for families looking to learn about financial aid.