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Student Loan Refinancing

Student Loan Refinancing Is Poised to Be the Next Big Employee Benefit

All eyes are on the youngest millennials who are entering the workforce. Overall, the generation is now the largest group of workers in America and it is also poised to be the most educated in U.S. history.

But they are also the most indebted when it comes to their education —  carrying the lion’s share of nearly $1.3 trillion in student loan debt the United States.

For many new many workers entering the job force, that means worrying about paying off debt first — often before saving for retirement.

Now employers are starting to take notice, and a growing number of companies enticing prospective staffers with student loan refinancing and assistance as an employee benefit, right alongside 401(k)s and health insurance.

Are you an employer? Learn more about Earnest’s Employee Benefit Program.

Why is student loan assistance revolutionizing the workplace?

First, consider the scope of the student loan debt and how it affects the job market.

SLR-Next-Employee-Benefit-2 (1)

What does student loan debt mean for employers?

Their newest employees entering the workforce need financial planning and debt advice, especially as their student loans could mean deferring other priorities such as retirement savings and starting a family.

Several companies have already set precedents for helping employees deal with student debt.

In return, they aim for talented recruits and less employee turnover.

  • Companies are starting to offer loan assistance: PricewaterhouseCoopers launched its Student Loan Paydown program in September 2015. The company will contribute up to $1,200 per year toward paying down an employee’s student loan, lessening their loan period and interest payments in the process. The company has called student loan debt “a major societal issue.” PwC, which actively recruits graduating college students, also attracts young employees by offering benefits such as tuition reimbursement, bonuses, and flex days.
  • ChowNow, an online food ordering company, will help indebted employees with up to $1,000 per year toward student loans. Christopher Webb, ChowNow’s chief executive officer told the press: “Like everything, you have to stand out to attract talent.”
  • The government could incentivize employers to help. Congress is considering H.R. 1713, a bill that encourages employers to offer student loan assistance by ensuring that any loan payments made as a part of that benefit would not be subject to income or payroll taxes.
Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.